The bear market has exposed a lack of short-term funding, according to Graziano Lusenti, managing associate at research house Lusenti Partners, based in Nyon, Switzerland.

This contrasts with the European and US experience of the equity downturn, which has led to a focus on long-term funding levels.

“We have noticed that since the 2000 crash most institutions have a long-term view, but they have realised that they also need to manage their assets on a yearly basis”, said Dr Lusenti. “We are now seeing them combining long and short-term strategies.”

The result of this strategy shift is panning out differently according to the institution, he said. However, most have been and continue changing their asset allocations, typically decreasing equities in favour of bonds and real estate.

Christophe Schenk, chief investment officer at Credit Suisse Asset Management, which supported Dr Lusenti’s research, pointed out that a move towards alternative investments is also taking place. The research found that 33 per cent of institutions currently use alternatives, such as hedge funds, gold and private equity, and a further 15 per cent intend to start using them in the near future.

The current average allocation to alternatives was expected to rise from 3 per cent to 5 per cent over several years. Larger funds were thought more likely to start investing in hedge funds due to the higher levels of expertise of their trustees.

However, recent Swiss legislation requires trustees to receive more training in complex investments.

RM

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