Fidelity International has just released a study on future investment trends – conducted between October and November 2024 – focusing on 125 institutional investors and intermediary distributors in selected countries in Europe and Asia.

Sixty per cent of professional investors believe that they are fully/almost fully financially prepared to support clients to live longer in retirement, while 40 per cent highlighted a lack of preparedness, according to new findings from the Fidelity International Professional Investor DNA Survey.  

The study, developed with Crisil Coalition Greenwich, comes at a time when the global population is ageing. According to the World Health Organisation, the number of persons aged 80 years or older is expected to triple between 2020 and 2050 to reach 426 million.

“The global retirement challenge and the pension funding gap are not new, yet these issues continue to accelerate significantly, as populations are expected to live longer, and to some extent, be healthier and more active in retirement,” Katie Roberts, global head of client solutions at Fidelity International, said. “While the retirement challenge requires local solutions, what is clear is that state support overall is likely to be less going forward, with individuals becoming increasingly responsible for financing their retirement.”

The firm highlighted that an important element for preparing for retirement includes identifying the appropriate financial investments and solutions needed to support clients to create sufficient wealth.

When asked whether there are enough products and solutions to meet the needs of an increasing life expectancy, the survey revealed that only 57 per cent of professional investors agreed. While the majority of respondents are comfortable with the number of solutions available, it also highlights the need to increase developing the product and solution range geared towards longevity.

Asset allocation
In terms of asset allocation, the study shows that investors are leaning towards equities and private assets as a means of increasing the risk-return profile of their portfolios in anticipation of longer life expectancy for their clients. Over half of investors confirmed that they expected to increase their exposure to equity, closely followed by private assets (52 per cent) and fixed income (24 per cent). Meanwhile, the survey pointed to a potential decrease in exposure to multi-asset funds (28 per cent), cash (26 per cent) or fixed income (21 per cent). 

“Preparing for retirement remains complex, especially when considering the changing market environment, local specificities including regulation, pensions policy and frameworks, or age of retirement. In parallel, investors must consider the difference between investing for retirement and investing in retirement which involves ensuring sufficient funding throughout the entire extended life cycle,” Roberts continued. “In the UK, we are working hard to continue to build innovative investment solutions, such as our new Fidelity Diversified Private Assets LTAF, offering defined contribution (DC) pension schemes diversified exposure to private assets in a single, convenient vehicle. We also support our clients through strategic partnerships, such as our recent work developing the Standard Life Smoothed Return Pension Fund.”

Fidelity International offers investment solutions, services and retirement expertise to more than 2.8 million customers globally. Operating in more than 25 locations and with $893.2 billion in total assets, clients range from central banks, sovereign wealth funds, large corporates, financial institutions, insurers, and wealth managers, to private individuals.