As recession fears rise, investment consultants are advising institutional clients to ensure their portfolios are well diversified to reduce downside risks. They also advocate a degree of dynamic asset allocation in a bid to capitalise on changing market conditions.

Amid high inflation, market volatility and mounting fears of recession, investment consultants are advising asset owners to consider implementing some form of tail-risk protection, while urging them to first focus on building well-diversified investment portfolios that could protect against downside risks.

Analysis: UK pension schemes are among the institutional investors across Europe that have maintained a strong focus on alternatives, particularly infrastructure, as investment activity picked up in November, according to MandateWire data.

Managers of liability-driven investments are likely to reduce the level of leverage used in their funds in the aftermath of the Bank of England’s intervention, investment consultants say.

UK institutional investors showed an increased appetite for income-generating alternative asset classes last year amid an ultra-low and negative interest rate environment.