European pension funds are prioritising risk management while also squeezing as much out of their assets as possible in 2019, according to an IPE survey.

The poll of 123 asset owners found that almost half (48.8%) considered risk management as their top priority this year. More than a third (39%) had “maximising return” at the top of their agenda.

As to what risks they would be managing, it was evident that investors were particularly wary of a potential downturn in asset prices: two thirds (65.8%) of respondents said the end of the cycle was their top concern for 2019.

Given the collapse in equity markets in the fourth quarter of 2018, it is hardly surprising this risk was front of mind. The S&P 500 fell by 14.3% in the last three months of the year, while the MSCI World index fell by 13.9%, according to Capital IQ.

Already, a number of pension funds in the Netherlands and Denmark have reported losses for the fourth quarter – in many cases wiping out gains made over the rest of 2018.

Unsurprisingly, with Brexit unsolved and trade wars rumbling on, geopolitical risk was also a top concern for more than half (58.3%) of investors.

While a little over a third (37.5%) of investors cited climate change as their biggest concern, far more stated that ESG and impact investing strategies were top of their asset class research priorities. More than half (57.4%) selected this option, while a quarter (26.2%) said they were most interested in learning more about green bonds and climate finance.

IPE surveyed 123 pension funds in December 2018, asking for the objectives, concerns, and asset class priorities for the year ahead.

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