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Schroders Survey Finds US Retirement Plan Sponsors Are Bracing for Volatility and Looking to Active Management
By: Scott Garrett, Schroders
A Schroders-sponsored survey shows a majority of institutional investors, including US retirement plans, expect significant market volatility over the next 12 months. Many also believe active managers and greater exposure to private markets can enhance the resilience of their portfolios.
This is an excerpt from NCPERS Summer 2025 issue of PERSist.
Sponsors of US retirement plans are bracing for heightened market volatility, according to Schroders Global Investor Insights Survey 2025. The annual survey polls institutional investors worldwide for their views on key investment themes. Among the nearly 1,000 institutional investors surveyed, 81 represented US retirement plans, with plan sizes ranging from under $1 billion to nearly $100 billion. Half the group were from public employee plans, and there was a nearly even split of defined benefit and defined contribution plans.
More than half of US retirement plan sponsors – 53% – expect that the next 12 months will be more volatile than 2022 and early 2023, a period that saw the return of inflation. Forty-one percent anticipate the next year could be even more volatile than the Global Financial Crisis. The top macroeconomic concerns for respondents were tariffs and protectionist trade policies (83%), an economic downturn (60%) and higher inflation (57%). In this climate, 51% of the plans now rank portfolio resilience as their top investment priority.
This volatile market environment has refocused investors' attention on active management. Sixty-three percent of US retirement plans are confident that active management can deliver value in the new investment landscape, and 77% say they are more likely to employ active management in the next year.
Retirement plans recognize that active management can enhance portfolio resilience
When asked to identify the reasons for their confidence in active management, US plans cited active managers' nimbleness to navigate uncertainty and provide diversification as their top reason (55%), followed by the active managers' ability to apply specialist approaches and provide specific market segment exposures (51%).
The attributes of active managers that the plans most valued were their ability to conduct rigorous research into companies and industries (cited by 52%) and to help enhance the long-term resilience of investor portfolios.
“Active management has demonstrated it can adapt to changing market conditions, manage risk, and potentially uncover returns in areas where passive strategies may fall short,” said Tom Darnowski, CEO, Americas for Schroders.
Private debt and credit alternatives are top of mind for income
Private debt and credit alternatives have moved from the margins to the mainstream for institutional portfolios. Having captured an increased share of the lending market since the end of the Global Financial Crisis, private debt has grown considerably, and more investors now view it as reliable source of income.
North America continues to lead the way in private credit adoption. As the world's largest and most mature private debt market, it may not be suprising that 52% of US plans view private debt and credit alternatives (PDCA) as their top overall return opportunity, ahead of private equity (cited by 48%) or public equity (42%). When institutional investors globally were asked to identify their top sources for income generation specifically, North American investors once again expressed the highest preferrence for PDCA, with 52% of plans citing it as their preferred source, well above the 33% who mentioned public corporate bonds and the 25 who cited income-generating equities.
The retirement plans saw the best sources for attractive risk-adjusted income in this climate as direct lending (noted by 76%); securitized products, including asset-backed securities, (60%); and real estate debt (55%).
“In an environment defined by uncertainty, inefficiency and volatile risk premiums, the ability to select well-collateralized debt, backed by strong borrowers and robust security packages, is a significant advantage of private debt and alternative credit markets,” said Michelle Russell-Dowe, Co-Head of Private Debt and Credit Alternatives at Schroders Capital.
Plans are looking to global equities as a source of strong returns
Among public equities, more plans believe the strongest returns will come from global equity strategies (44%), surpassing those who cited regional portfolios (35%). Despite the recent strong performance of the US market, only 21% of the US plans believe domestic equity strategies will deliver the best returns.
Survey methodology
The full survey, with results for all institutional investors globally, is available here. The fieldwork was carried out by Core Data Research during April–May 2025. The survey went into the field 13 days after the Trump Administration's initial announcement of higher tariffs on April 2, the survey results reflect a historic moment in time for markets and investment strategy.
Disclosures: All investments involve risk, including the loss of principal. Past performance provides no guarantee of future results and may not be repeated. The views shared are those of the author and may not reflect the views of Schroders Plc or any of its affiliates. Information herein has been obtained from sources we believe to be reliable, but Schroders Plc does not warrant its completeness or accuracy. No responsibility can be accepted for errors of facts obtained from third parties. Reliance should not be placed on the views and information in the document when taking individual investment and / or strategic decisions. Any mention of industries or sectors is for informational purposes only and should be interpreted as a recommendation to invest or divest in any company or adopt a particular investment strategy. Schroder Investment Management North America Inc, registered as an investment adviser with the SEC, CRD Number 105820.
Disclosures: All investments involve risk, including the loss of principal. Past performance provides no guarantee of future results and may not be repeated. The views shared are those of the author and may not reflect the views of Schroders Plc or any of its affiliates. Information herein has been obtained from sources we believe to be reliable, but Schroders Plc does not warrant its completeness or accuracy. No responsibility can be accepted for errors of facts obtained from third parties. Reliance should not be placed on the views and information in the document when taking individual investment and / or strategic decisions. Any mention of industries or sectors is for informational purposes only and should be interpreted as a recommendation to invest or divest in any company or adopt a particular investment strategy. Schroder Investment Management North America Inc, registered as an investment adviser with the SEC, CRD Number 105820.
Bio: Scott Garrett, CFA, Head of US Institutional
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