Six in 10 (60 per cent) global institutional investors say interest rate changes were the No. 1 factor behind portfolio adjustments in 2024, according to a new report by the International Forum of Sovereign Wealth Funds.
The report, which was based on the activities of long-term institutional investors representing more than $46 trillion in assets under custody and administration, found inflation (59 per cent), public market valuations (55 per cent), growth changes (50 per cent) and geopolitical risk (44 per cent) also led to portfolio adjustments.
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Notably, fewer than a fifth of institutional investors cited climate change (18 per cent) and regulatory changes (16 per cent) as factors that resulted in portfolio changes.
In the face of a rapidly changing geopolitical backdrop, the report noted, investors are being more cautious with their portfolio management activities.
The report also cited State Street’s behavioural risk scorecard — an aggregate measure of risk appetite based on the capital flows and portfolio holdings — that found flows across risk assets evidenced risk-seeking behaviour throughout 2024. However, that thinking has been pared back since the start of 2025.
Sovereign wealth funds said they’ve been less keen on public equities. Indeed, half of respondents said their allocations were unchanged in 2024 and a third said they had decreased public stock market exposure.
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