Natixis Investment Managers’ newest survey data on institutional investors’ outlook for 2023 shows that those who represent public and private pensions, insurers, foundations, endowments and sovereign wealth funds around the world say their economies are in a recession, monetary policy alone cannot curb inflation and rising rates will soon usher in a resurgence in traditional fixed income investing.

The investors together manage a combined $20.1-trillion in assets under management. They predict that high inflation, high interest rates and a prolonged bear market will continue in the coming year.

Entitled After the Gold Rush, the 2023 Natixis institutional outlook survey of 500 investors in 29 countries found 80 per cent of respondents in all regions, except Asia, say their economies are in or will be in a recession next year, 73 per cent don’t believe monetary policy alone can curb inflation and 54 per cent predict inflation will remain the same or move even higher in the coming year, despite rate hikes.

Of those surveyed, 57 per cent say war is the top economic threat in 2023, followed by policy error cited as a threat by 53 per cent of respondents and deteriorating relations between the United States and China, cited as a top economic threat by 40 per cent of respondents.

Finally, 72 per cent think rising interest rates will usher in a resurgence in traditional fixed income investing; 56 per cent say their outlook on the bond market next year is mostly bullish.

Interestingly, despite challenges, few will lower their return expectations with 77 per cent saying they will either maintain or increase their return assumptions. Average return assumptions among those surveyed is 7.9 per cent.

In addition to rising rates making bonds attractive again, they add that volatility makes valuations matter once again, China is casting a shadow over emerging markets (two-thirds think emerging market investments are overly dependent on China) and alternative investments are answering the call for yield. It also looks at private markets, blockchain and crypto in its analysis, and discusses consumer spending, currency valuations, the energy sector, emerging markets and portfolio strategy for managing it all going forward.