Investors see the value of active management as volatility intensifies

With rising uncertainty on their radar, investors seek to make their portfolios more resilient. They see active investment management as key to the solution.

As investors around the world acknowledge significant risks in 2025 and beyond, a large majority (75%) also believe actively managed strategies offer value in current markets. An even bigger proportion – four out of five – say they will increase ther investment in active strategies over the coming 12 months

Schroders Global Investor Insights Survey, which polled the attitudes of almost 1,000 professional investors from around the world, captured the shift in market sentiment which occurred in the first half of 2025 triggered in large part by US trade policy announcements.

Read the full results of Schroders Global Investor Insights Survey 2025

The survey was undertaken from mid-April, a fortnight after President’s Trump’s so-called “Liberation Day”, on which initial US tariff policies were declared. Markets fell sharply in response. 

Global trade policy ranks as investors’ primary concern, but economic growth and interest rates are also on the radar

Investors were asked to rate their greatest concerns on a scale of one to four. The vast majority (63%) cited US trade and tariff policy as their chief worry. 

However, economic performance, inflation and higher interest rates also featured. After tariffs, the next three areas of concern – economic downturn, higher inflation and higher interest rates – were broadly equal in ranking. 

This ties in with another major source of financial market volatility during the first half of 2025: questions over the sustainability of national debt for major global economies including the US, Japan and other G7 countries. 

Higher interest rates are pushing up the debt-servicing costs of the world’s biggest economies. Weaker economic growth would likely worsen this position. Bond markets have experienced volatility as a result, and the survey findings suggest investors anticipate more related uncertainty ahead. 

When asked to rank their assessment of volatility today against previous market shocks, one in four respondents said they expect greater volatility in the coming 12 months compared to both the COVID-19 epidemic and the global financial crisis of 2008.

Volatility has brought home the danger of market concentration 

In public equities, the volatility sparked by US tariff announcements in April was an unwelcome reminder that markets had become increasingly concentrated around US equities, and around giant US tech companies especially. By the start of this year global indices, such as the MSCI World, comprised over 70% US stocks. 

So when asked which indices posed greatest concentration risk, three quarters of investors (74%) cited the US S&P500 index. The global MSCI World index was the next greatest cause for concern, likely due to its extreme US tilt. 

In the face of these risk factors, investors want to make portfolios more resilient 

Given the above volatility and the risks perceived by investors, achieving “portfolio resilience” was the goal of the majority of investors (55%), ahead of return generation and income.  

“Portfolio resilience” is not to be confused with risk aversion. A majority of investors (62%) are maintaining or increasing their risk appetite in the current environment. This suggests that many see opportunities as well as risk within current volatility. 

Portfolio resilience is associated with active investment strategies and a mix of public market and private market assets

Four in five investors say they are more likely to invest more into actively-managed strategies in the coming 12 months. This is linked to other findings where investors see active management as better suited to successfully navigating a more complex period in markets than a passive index-tracking approach.

When asked to identify which attributes of active management held the greatest appeal, respondents cited a range of factors, first of which was the ability to capture returns wherever they arise. Achieveing portfolio resilience was the second most valued attribute.

Active management was also seen to bring “deep specialist knowledge”.

Johanna Kyrklund, Schroders’ Group CIO, said: “The wider backdrop is that financial markets are still adjusting back to structurally higher interest rates, made painful in many cases by high levels of debt. This is raising questions about future market trends and the value of passive approaches in a period of greater uncertainty.” 

While the high level of confidence in actively-managed investments was one of the stand-out themes of this year’s survey, so was the high degree of interest in using a mix of both public and private assets. 

When asked which two asset classes they would use to access the best return opportunities, 46% cited public equities and 45% cited private equities. Interestingly, the third asset class cited here (by 40%) was another private market category – private debt and credit alternatives (PDCA). 

Again, when it came to generating income, PDCA was a priority, with over 40% of both institutional investors and wealth gatekeepers looking to these assets to meet their income needs. High yielding publicly-traded equities and public-traded bonds came a close second and third. 

“The ability to access diversifying and flexible income through the wide universe of securitised and asset-backed finance provides a valuable extension of the fixed income toolkit for investors,” said Michelle Russell-Dowe, Schroders Capital’s Co-Head, Private Debt and Credit Alternatives.

Read the full results of Schroders Global Investor Insights Survey 2025

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Originally Posted on June 11, 2025 – Investors see the value of active management as volatility intensifies