Lights out, the party’s over, time to pack it in.
Institutional investors overwhelming feel 2019 will signal the end of the current market mania.
Specifically, two-thirds see the beginnings of a bear market next year, and 70 percent expect another financial crisis within five years.
But even as they anticipate more turbulent times, six in 10 investors say they feel prepared to handle the risks, according to a new report released by Natixis Investment Managers.
“Our research shows institutional investors are already positioned for the potential market turbulence on the horizon,” David Giunta, CEO for the US and Canada, said in a statement. “For these sophisticated investors, actively managed strategies and alternative investments are their tools of choice to help optimize their portfolios for the challenges ahead.”
Investors see geopolitical disruptions and trade disputes as the biggest potential threats to markets in 2019, with rising interest rates posing the greatest risk to portfolios.
Fully 84 percent of institutions expect more volatility in the stock market and two-thirds say the bond market will be more volatile as well.
And 79 percent believe the current market environment favors active management, and average allocations to active strategies grew to 70 percent, up from 64 percent in 2015.
“Institutional investors have time horizons that average ten years or more, so while it is important for them to look at factors that will affect short-term performance, the survey results also yield critical insight into bigger issues, such as interest rates, political upheaval and the debt crisis that institutions see as driving long-term investment strategy,” added Bob Hussey, Executive Vice President of Sales Management at Natixis Investment Managers.
Natixis Investment Managers’ Center for Investor Insight surveyed 500 institutional investors around the world on their market outlook and asset allocation plans for 2019.
The report, titled “Keep Calm and Invest On,” includes additional trends and concrete findings guiding institutional investors’ ongoing investment strategy.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
