Nearly two thirds of leading figures in the European investment industry believe that greater expectation from clients will compel fund managers to increase levels of shareholder engagement, according to Penrose Financial's second annual survey on the future of the pensions and investment industry.

The findings follow the recent publication of the Financial Reporting Council's UK Stewardship Code, urging large shareholders to actively monitor companies and seek corporate change when necessary.

The survey, which covered a range of topical investment and pensions issues, found that 44 per cent of respondents believed environmental factors posed a significant risk to portfolios and should be a key consideration when making investment decisions. This follows recent high-profile events, notably the BP oil spill and its impact on share values. However one in four still felt that environmental factors should be incorporated into investment strategies due to significant opportunities within the sector and potential for outperformance.

Of the over 100 senior figures surveyed, fewer than ten per cent believed traditional long-only and passive investment providers would flourish, while almost 80 per cent expected multi-strategy and specialist boutique managers to emerge as the most successful over the coming 18 months. A significant proportion (41 per cent) felt that traditional investment consultants will become less dominant over the next 12 months, with investors turning increasingly to fiduciary managers or going directly to asset managers.

Over the past year, the proportion of respondents who believe the National Employment Savings Trust would fail to boost saving amongst low-middle income groups increased significantly, from 57 per cent in 2009 to 76 per cent this year. One in five questioned whether the initiative would actually go ahead, and less than two per cent perceive the scheme as affordable and practical.

Sally Todd, managing partner of Penrose Financial, says: "The survey demonstrates that the pensions and investment industry is rapidly evolving, as investors move increasingly away from traditional asset allocation strategies and into alternative offerings. With shareholder engagement and environmental issues rising swiftly up the industry agenda, today's findings offer a telling insight into views on these key areas. The idea of large investors doing more long-term good with their holdings under an enlightened sustainability banner is compelling."