Investor Sentiment Points to Selective Risk-Taking Into 2025
A recent survey from PGIM, a global asset manager with $1.33 trillion under management, shows a striking mix of caution and resolve among institutional investors. Even with geopolitical tensions simmering in several regions and elections queued up around the world, respondents signal a resilient, risk-on posture. Many are preparing to lean into higher-risk opportunities as 2025 approaches, while still keeping an eye on fast-moving threats that could rattle markets.
Geopolitical Pressures Meet a Willingness to Act
PGIM polled 400 institutional investors representing roughly $9 trillion in assets under management. More than half said geopolitics is their top concern—a clear acknowledgment that policy uncertainty, regional conflicts, and shifting trade dynamics can ripple through portfolios. Yet about one-third of those same investors plan to get more aggressive in the coming year. It’s a notable stance given the ongoing military tensions and structural economic changes shaping today’s market backdrop, and it suggests investors are looking for ways to balance risk with opportunity rather than stepping aside.
Where Investors See the Highest Geopolitical Heat
Two areas dominate the watchlist: the Taiwan Strait and the South China Sea. Nearly half of respondents (48%) flagged these regions as the most likely to jolt global markets over the next two years. By comparison, 27% pointed to potential military conflict in the Middle East as their top risk. The split doesn’t minimize the seriousness of any one hotspot; it simply highlights where institutions believe market-moving shocks are most likely to originate. And it aligns with a broader pattern: more investors are beginning to treat volatility as a source of opportunity—not only as a setback to endure.
Elections Are in Focus—and in the Models
Election outcomes are shaping how portfolios are built and hedged. A majority (56%) of those surveyed factor upcoming elections into their decision-making, reflecting a practical, measured approach rather than a wait-and-see stance. At the same time, some are building cash cushions. Twenty-nine percent have raised cash reserves in response to geopolitical uncertainty, with this shift most pronounced in the U.S., where 41% have moved to cash as a risk management step. Liquidity offers options; it can also be a signal of caution while investors assess policy paths and market reactions.
Confidence About 2024’s Political Crosswinds
Even so, roughly three-quarters of institutional investors say their portfolios are prepared for potential election-related fallout in 2024. They don’t expect policy changes to blindside them and emphasize the role of built-in risk controls. That confidence extends to other macro fault lines as well—global debt dynamics, supply chain disruptions, and trade disputes—areas where many believe they’ve stress-tested their exposures and kept playbooks ready.
Positioning When the Path Ahead Is Hazy
Almost half of respondents (48%) believe today’s geopolitical risks are simply too unpredictable to fully mitigate. That doesn’t mean inaction. It means clarity about what can be controlled and what can’t. The question becomes practical: which portfolio moves help you stay invested through shocks without losing the ability to pivot when conditions change?
What a Resilient Playbook Looks Like
The report points to a few core practices. First, broaden diversification across sectors, including areas such as data centers and alternative energy, where shifting geopolitical currents may create new pockets of demand. Second, keep liquidity in mind. Access to cash and liquid instruments helps investors avoid becoming forced sellers in a downturn, which can be as important as any single tactical bet.
Third, make use of quantitative models and buffered ETFs to help shape downside protection while preserving upside participation. Finally, put the portfolio through its paces: stress-test exposures, and be ready to use active strategies when markets move abruptly. None of these steps erases uncertainty. Together, they can make it more manageable.
About PGIM
PGIM is a global asset manager serving retail and institutional clients through 41 offices across 18 countries. Its approach emphasizes disciplined risk management and diversified strategies aimed at improving client outcomes. A multi-affiliate model allows PGIM to bring specialized expertise across key asset classes—an approach designed to help clients stay the course even when markets are turbulent. For additional perspective, visit pgim.com.
Frequently Asked Questions
What’s the main takeaway from the PGIM survey on investor sentiment?
Despite elevated geopolitical tensions, a meaningful share of institutional investors plan to move up the risk curve by 2025. The survey shows a blend of caution and conviction: geopolitics is the top concern, yet many still intend to pursue higher-risk opportunities.
Which regions are investors watching most closely?
Respondents point primarily to the Taiwan Strait and the South China Sea, with 48% citing these areas as the most likely to affect global markets over the next two years. Military conflict in the Middle East ranks as the top risk for 27% of investors.
How are elections influencing portfolio decisions right now?
More than half (56%) factor upcoming elections into their strategies. Some are also building liquidity buffers: 29% have increased cash, and in the U.S. that figure rises to 41%, reflecting a practical approach to policy uncertainty.
What practical steps can help manage geopolitical risk without stepping out of markets?
The report highlights several tools: diversify across sectors, maintain liquidity to avoid forced selling, use quantitative models and buffered ETFs for downside management, and stress-test portfolios while keeping active strategies ready.
Who is PGIM, and what sets its approach apart?
PGIM is a global asset manager with 41 offices in 18 countries. Its multi-affiliate model and focus on disciplined risk management and diversification aim to help clients navigate volatile markets with preparation and flexibility.
