Active investing sees resurgence as volatility coping mechanism

Institutional investors and wealth managers are increasingly turning to active investment strategies to buff up portfolios and cope with ongoing economic and market volatility, according to new research from Schroders.

The 2025 Global Investor Insights Survey (GIIS), featuring over 1,000 global respondents worth over US$67 trillion in assets, found 80 per cent were somewhat or significantly more likely to expand their use of actively managed investment strategies in the next 12 months.

Of the 79 Australian respondents, 84 per cent were likely and 77 per cent were confident that active management would “deliver value” amid changing market conditions.

This welcome change comes after a significant length of time in which Australian investors leaned away from active managers, as investors polled cited the opportunity to capture outperformance (62 per cent), seeking specialist approaches and exposures (62 per cent), and harnessing nimbleness to navigate uncertainty (48 per cent) as the key reasons for the switch back.

The research, following in the wake of market volatility sparked by the US’ controversial trade policy, also indicated that active management’s ability to strengthen portfolios and their resilience was a likely reason for investors’ return, with 65 per cent of respondents saying tariffs were their biggest macroeconomic concern and uncertainty over US foreign policy was the largest geopolitical risk influencing investment decision-making for 56 per cent.

“In the face of heightened economic uncertainty and ongoing market volatility, an overwhelming majority of Australian investors are turning to active management, with 84% set to increase their allocation to actively managed strategies this year, similar to global investor data,” Simon Doyle, Chief Executive Officer and Chief Investment Officer at Schroders Australia, said.

“With a clear focus on outperformance, specialist strategies, and navigating uncertainty, investors are prioritising adaptability, whilst raising questions about the value of passive approaches in periods of greater unpredictability and future market trends.

 “Against the backdrop of trade and geopolitical uncertainty, investment priorities have shifted, with resilience now front of mind.

“Since broad market gains can no longer be taken for granted, active strategies are playing a crucial role in helping investors manage complexity, build resilience within portfolios, and identify compelling opportunities.”

Of the 58 per cent of pension funds, insurance companies, single family offices, endowments and foundations, official institutions and wealth gatekeepers surveyed who indicated portfolio resilience was their top priority, 84 per cent said they are looking to leverage active management. According to the results, this was due to its ability to capture investment opportunities (53 per cent) and its robust research process into companies and industries. (46 per cent)

“In today’s environment of ongoing market volatility, Australian investors are demonstrating a clear shift towards diversification and selectivity in their pursuit of returns, increasingly turning to active management,” Doyle said.

“We are seeing strong interest in both public and private markets, with conviction in global equities and private equity opportunities amongst Australian investors. Bonds continue to play a vital role in building resilient portfolios through diversification, downside protection, and liquidity.

“This dynamic, actively-managed approach highlights the importance of adaptability in achieving robust long-term investment outcomes.”