Demand for equities rebounds among asset owners

Equities accounted for more than a third of all expressions of interest and investments (Michael Nagle/Bloomberg)

Equities bounced back in August, taking the top spot as the most-allocated-to asset class among European asset owners, but demand for alternatives also rose considerably. Plans for fixed income allocations fell sharply after a bumper July, following a reversal in global bond markets.

Demand for equities rose, with the asset class accounting for more than a third (33.7 per cent) of all expressions of interest* and investments** in broad asset classes, up from 16.7 per cent in July.

A large rise in equity mandates was driven by the €2.8bn (£2.4bn) Caisse Nationale des Barreaux Français, a pension fund supporting French barristers, which appointed new managers to run three new European active mandates and two passive mandates.

The new equity mandates from CNBF each have a duration of four years. The fund launched its search for equity managers in February.

Fondtorgsnämnden — the Swedish Fund Selection Agency — also awarded 10 active Swedish equity mandates and five passive Swedish equity mandates.

Fixed income investments saw a more modest rise in popularity in August, with eight investments tracked from European investors compared with only three in July.

But plans to invest in fixed income fell steeply, with only seven expressions of interest* recorded in August, down from 22 in July. Indeed, July saw a "search bonanza" for fixed income mandates, with investors tendering almost £3.5bn in new bond mandates.

With fewer mandates being tendered, fixed income accounted for 15.8 per cent of all expressions of interest and investments, down from more than a fifth (21.9 per cent) in July.

While overall demand for fixed income fell, MandateWire reported in the middle of August that the UN World Food Programme was looking for a manager to run a $750mn (£554.8mn) global fixed income mandate for its employee benefits funds.

Indeed, according to WTW's Global Markets Overview for August 2025, bond yields "reversed course" last month after rising in July, while bond markets are still sensitive to labour market and manufacturing data in the US.

"US and global bond markets will remain focused on updated policies from [US President Donald] Trump, with the impact on growth, inflation and bond markets, ultimately, dependent on the actual policies that are implemented," the investment consultancy said.

Investor appetite for alternatives increased in August, with the asset class making up almost half (48.4 per cent) of all expressions of interest and investments, up from more than a quarter (28.9 per cent) in July.

Among the investors taking up greater allocations towards alternatives, the €590bn Dutch manager APG made a £225mn portfolio commitment to social assets in the UK. The seed portfolio is being managed by InfraRed Capital Partners, which will also hunt for European social assets. APG says it aims to grow the portfolio with InfraRed significantly in the future.

Marjolaine Lopes, Europe social infrastructure lead at APG, said the investment marked a "meaningful step" in its social infrastructure investments, allowing the Dutch manager "access to high-quality assets in the UK healthcare and education sectors".

The £284bn Phoenix Group also allocated to alternatives as it made a £75mn private debt investment in Australia. Cecile Retaureau, head of private markets at the large pension provider, called the Australian market a "compelling investment landscape for our private markets strategy".

Big plans to invest in alternatives came from the French sovereign fund Bpifrance, which continued its search for both national and regional early-stage venture capital funds.

The search notice said Bpifrance was considering funds making significant allocations to venture capital within France. Bpifrance was also searching for small and mid-sized private enterprises with lower growth rates, or other regional companies experiencing difficulties, to invest through its €250mn Fonds de Fonds France Relance Etat-Régions.

The most popular alternative sub-asset class was infrastructure, which attracted almost a third (30.4 per cent) of all expressions of interest and investments in alternatives, matching the level of interest seen in July (30.3 per cent).

Private equity (excluding venture capital) was the second-most sought-after alternative sub-asset class, with more than a quarter (28.3 per cent) of expressions of interest and investments targeting the sub-asset class.

Along with APG's commitment to UK social assets, another significant allocation to infrastructure came from the £32.1bn Pension Protection Fund, which invested £60mn in the Haweswater Aqueduct Resilience Programme, a project aimed at improving water quality across Greater Manchester and Lancashire.

Neha Dedakia, private credit portfolio manager at the fund, said the investment would provide "strong returns" for its members while "supporting critical UK infrastructure that millions of people rely on every day".

"Executing this complex deal directly in house demonstrates the strength of our investment capability and underlines our role as a long-term, responsible investor in the UK economy," Dedakia added.

*Expressions of interest comprise manager searches, planned investments in individual new asset classes, and planned investments in individual existing asset classes recorded by MandateWire in August 2025.

**Investments comprise the number of awarded mandates and asset reweights tracked and reported on by MandateWire in August 2025.