London - August 20, 2009 – An independent global survey of asset managers from CREATE-Research, commissioned by Citi’s Global Transaction Services and Principal Global Investors (Principal), has found that, despite the severity of the current crisis, there is still an appetite for opportunism, especially from defined benefit or final salary pension (DB) clients.

The report showed that 60% and 30% of the 225 asset managers surveyed expected DB and DC clients respectively to engage in opportunistic investment as part of a 'core and explore' investment strategy.

Professor Amin Rajan, CEO of CREATE-Research commented:

"Simplicity, safety and quality are now the watchwords underpinning clients’ investment goals. While funds consequently recognise the need to adopt a pragmatic approach to investment, managers are finding the dislocated debt markets attractive, where the savagery of the downturn is creating value opportunities."

However this opportunism will occur against a backdrop of changing priorities, with asset managers predicting that DB clients will favour mainstream asset classes, with 60% expected to increase allocations to global equities and 53% to investment grade bonds. 67% of asset managers also expect DB clients to increasingly favour Liability Driven Investment strategies.

DC clients are also expected to favour mainstream asset classes as they seek capital protection, with 61% of respondents predicting that the emphasis on debt and equities will continue worldwide.

Jim McCaughan, CEO of Principal Global Investors commented:

"Client behaviour will inevitably change in response to the economic downturn. While liquid asset classes will be preferred by all client sectors, we may start to see a renewed appetite among investors for opportunistic forays into debt and equity markets in a bid to boost returns."

Other key findings from the research include:

Expected priorities for Defined Benefit Schemes

  • 50% of DB schemes will require a manager fee structure which delivers greater value for money
  • 45% of DB schemes are expected to cite uncorrelated absolute return as a key three year requirement
  • 40% of DB schemes will be searching for less complexity and risk in products and better liquidity

Expected priorities for Defined Contribution schemes

  • 44% of DC schemes will require less complexity and risk in products
  • 44% of DC schemes will require greater value for money from external asset managers
  • 31% of DC schemes will have more focus on capital protection

Jervis Smith, Global Head of Client Executive within Securities and Fund Services, Citi, said:

"The market is in a state of flux. On the one side are the demand side factors - from investors - which can cause a tipping point, accelerate change and commoditise the industry. On the opposite side are those supply side factors which can reverse client sentiment, moderate the pace of change and revitalise the industry. Only time will tell its true direction."

The findings from the report entitled 'Future of Investment: The Next Move?', are based on a survey of 225 asset managers from 30 countries, responsible for a total of $18.2 trillion of assets[1]. The full report is available at:

About the research
The report entitled 'Future of Investment: The Next Move?, was jointly issued on 22 June 2009 and includes the results of a survey of 225 asset managers from 30 countries and interviews from pension funds, wealth managers, distributors and industry regulators. The research was commissioned by Citi and Principal Global Investors and was conducted by Create research.

CREATE is an independent think tank specializing in strategic change and the newly emerging business models in global financial services. It undertakes major research assignments for prominent financial institutions and global companies. It works closely with senior decision makers in reputable organisations across Europe and the US. Its work is disseminated through high profile reports and events which attract wide attention in the media. Further information can be found at

About Principal Global Investors
Principal Global Investors is a diversified asset management organization and a member of the Principal Financial Group®. Principal Global Investors manages US$200.8 billion (as at 30 June 2009) in assets primarily for retirement plans and other institutional clients, and draws from the expertise of 418 investment professionals. The firm offers a broad range of investment capabilities, including equity, fixed income and real estate investments as well as specialized overlay and advisory services. Our global reach provides an information advantage in researching and managing investment portfolios. At the same time, we serve clients on a personalized basis and tailor our capabilities to specific client objectives and investment goals.

Principal Global Investors (Europe) Limited is an integral part of the global network at Principal Global Investors and is authorised and regulated by The Financial Services Authority. Based in London, the office provides the local fund management, customer service contact and a single window for investors to access the global expertise of the Principal Financial Group.

Principal Global Investors provides clients with substantial flexibility and choice among portfolio structures, client reporting options and product features. It also offers a range of mutual funds designed for institutional clients wishing to invest via a pooled vehicle.

About Citi
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 140 countries. Through its two operating units, Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Additional information may be found at or

About Citi Global Transaction Services
Global Transaction Services, a division of Citi’s Institutional Clients Group, offers integrated cash management, trade, and securities and fund services to multinational corporations, financial institutions and public sector organizations around the world. With a network that spans more than 100 countries, Citi’s Global Transaction Services supports over 65,000 clients. As of the second quarter of 2009, it held on average $288 billion in liability balances and $11.1 trillion in assets under custody.

[1] As of April 2009