Investors Don’t Expect Double-Dip Downturn

A news release said 67% of managers expect the unemployment rate to decrease over the next six months. Should voters place Republicans in control of the House or Senate next month, 84% of institutional money managers expect investors to react favorably to the change.

Three-quarters of managers polled by NTGA expect global growth to accelerate or stay the same over the next six months, up from 63% in the second quarter. More than 70% of institutional managers believe inflation and interest rates will remain unchanged in the near term, and 61% of those polled stated that the U.S. equity market, as measured by the S&P 500 Index, is undervalued.

Other findings from the survey include:

• A growing number of managers (68%) are optimistic that corporate earnings will increase in the next three months, a notable increase from 57% in the second quarter.
• Some 58% believe emerging markets are undervalued, up from 40% in the prior quarter; 43% of managers surveyed believe that Japanese equity markets are undervalued, down from 53% in the second quarter.
• Investment managers cited technology, emerging markets, health care, industrials, and energy as the top five most attractive market segments. Energy fell in the rankings, while emerging markets and industrials moved up in the quarter. 
• Managers’ aversion to risk declined in the third quarter. Only 8% of managers stated they are more risk-averse than three months ago, down from 31% in the second quarter.  The number of managers that appear to be satisfied with the risk levels of their portfolio, responding with “no change in risk aversion,” increased from 48% in the second quarter to 65% in the third quarter, the highest level since NTGA began the survey in the fourth quarter of 2008.
• Similarly, portfolio concentration remained stable for most managers, with 72% of managers saying they have made no change to their portfolios’ concentration, compared with 65% in the last survey. Eighty-six percent of managers are within their normal range of cash, up slightly from the second quarter.

For its survey, NTGA polled 83 respondents, all of whom participate in NTGA’s external manager platform, including fixed income and equity managers across value and growth styles, with a bias toward fundamental, bottom-up stock picking strategies.