Today’s insights, tomorrow’s strategy 

Low expected future returns (59%) and inflation (50%) identified as the top 2 investment challenges for not for profits over the next 3 years.

Action points

• Review how the assets in your portfolio are likely to perform in a period of sustained high inflation. Which asset classes offer protection against inflation?
• Consider assets likely to perform well in an environment of rising rates as central banks act to counter inflation

65% of respondents see diversifying away from traditional asset classes as their greatest opportunity over the next three years.

Action points

• Decide what you’re trying to achieve and what you need your allocation to private markets to do for your portfolio
• Use experts to identify asset classes, develop a clear commitment plan and ensure appropriate sizing 

44% of respondents say their portfolios are more complex today than they were three years ago.

Action points

• Consider additional governance models (outsourcing, extension of staff etc) to ensure effective sourcing, assessment and execution which complement in-house skills
• Regularly review your provider to ensure that they best placed to  meet your changing needs

72% of respondents state an intention to increase or significantly increase their exposure to ESG-focused investments over the next 12 months. However 39% believe they have to make compromises on their investment objectives, and, of that group 57% believe they will have to compromise on absolute return. 

Action points

• Develop a clear policy for all of your organisation’s stakeholders covering responsible investing that covers issues such as mission alignment; diversity, equity & inclusion; and climate risk
• If you want to make a positive impact, move beyond exclusions toward thematic or impact strategies with measurable stewardship and engagement outcomes