Fund Managers are showing a reluctance to abandon equities amid market turbulence.
According to an Artemis Financial survey of fund managers, while they are showing reluctance towards risk in light of global market instability, they still believe equities offer value, especially in comparison with bonds. The broadest snapshot of global institutional investors’ sentiment shows that 11% regard equities as undervalued since the sharp rises in credit spreads and equity market volatility. In contrast, 42% think bonds are overvalued.
A large percentage of investors who were polled at the height of recent volatility, have increased their cash levels one percentage point to 4.5% of their portfolios, and have trimmed their expectations of corporate profits and expect global growth to slow. However, what is striking is that a little as 7% think a recession is likely in the next year. The survey suggests investors are not rushed to reassess the prospects for equities.
It appears that investors are viewing the market turmoil as a potential buying opportunity for equities and appear unwilling to turn fundamentally bearish on equities so long as they believe the rest of the world can decouple from a vulnerable U.S. economy.
