Goldman Sachs' Latest Survey: Cautious about US Stocks, Bullish on Private Equity Assets

Some time ago, I came across a survey released by Goldman Sachs Asset Management, which I found quite interesting and would like to share.

Goldman Sachs' survey shows that against the backdrop of the constantly changing geopolitical environment, most insurance institutions globally are concerned about the impact of inflation on their investment portfolios.

52% of the surveyed insurance companies regard inflation as the biggest macroeconomic risk, up from 42% in 2024, almost returning to the level in 2023.

However, despite the fact that the market may be affected by rising inflation and a slowdown in economic growth, the demand of insurance companies for the allocation of private equity assets remains strong.

Goldman Sachs' survey shows that 58% of insurance companies plan to increase their allocation of private credit within the next 12 months.

More Bullish on Private Equity Assets

The survey by Goldman Sachs' buy-side department shows that insurance companies believe that the top five macroeconomic issues that pose risks to their investment portfolios are:

Inflation (52%)
Slowdown/Recession of the US economy (48%)
Volatility in the credit and stock markets (47%)
Geopolitical environment (43%)
Tariffs/Trade (32%)

The survey shows that more than 90% of insurance companies in the Asia-Pacific region plan to increase or maintain their overall portfolios within the next 12 months.

Similar to 2024, insurance companies in the Asia-Pacific region still have the highest preference for credit risk, at 42%, compared with 16% in the Americas and 18% in Europe, the Middle East and Africa.

Insurance companies in the Asia-Pacific region also have an increased demand for illiquid assets, with the net increase in liquidity risk rising from 7% in 2024 to 30%.

Among the asset classes expected to have the highest total returns in the next 12 months, insurance companies said they are bullish on private equity assets. Private credit (61%) topped the list for the second consecutive year. The second to fifth places are: US stocks (57%), private equity (55%), secondary market private equity (30%), and high-yield bonds (28%).

Cautious about US Stocks

83% of insurance companies expect the S&P 500 index to bring positive returns in 2025. However, after the S&P 500 rose by 26% in 2023 and recorded a 25% increase in 2024, the growth is expected to slow down this year: 50% of the respondents expect the S&P 500 index to rise by 5% to 10% within the year; only 15% of the respondents think that the increase will be between 10% and 20%.

Only 17% of insurance companies plan to increase their allocation to US stocks, and 10% plan to increase their allocation to European stocks.

In terms of fixed income, 35% of insurance companies expect to increase duration risk in 2025, down from 42% a year ago. This shift to a cautiously optimistic attitude shows that the future interest rate environment remains attractive to investors seeking returns.

Increased AI Applications Drive Industry Consolidation

68% of the respondents believe that operational synergies and economies of scale are the main driving factors for the increase in mergers and acquisitions within the insurance industry. The increasingly widespread application of AI will improve efficiency and may drive further industry consolidation: 90% of insurance companies are currently using or considering using AI, up from 80% in 2024.

Among the respondents planning to adopt AI applications, 81% said that reducing operating costs is their main consideration.

This survey was conducted from January to February 2025, and the respondents were 405 chief investment officers and chief financial officers of insurance companies, the highest number in the history of this series of surveys. The total assets of the surveyed insurance companies exceed $14 trillion, accounting for about half of the total global insurance assets.

The survey also shows that insurance companies are optimistic about the prospects of private equity assets, and the following percentages of respondents plan to increase their asset allocations:

58% will increase their allocation to private credit
40% will increase their allocation to investment-grade private debt
36% will increase their allocation to asset financing
32% will increase their allocation to infrastructure bonds
29% will increase their allocation to private equity

It's quite evident from this Goldman Sachs survey that the current global investment landscape is undergoing a profound transformation. Amidst the twin challenges of soaring inflation and lackluster economic growth, the market continues to approach US stocks with caution. Conversely, private equity assets have emerged as the preferred option for savvy investors.#privatemarket