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Investment Manager Pulse
Aug 4, 2022
This quarterly survey of senior investment professionals gauges managers’ views on the economy, financial markets, and risks to their portfolios.
SIRG’s Investment Manager Pulse, Where Professional Investors Are Finding Opportunities, gauges managers’ views on the economy, financial markets, and risks to their portfolios.
SENTIMENT TOWARDS EQUITY FALLS TO THE LOWEST ON RECORD WITH ECONOMIC GROWTH CONCERNS
A few key takeaways from this quarter’s survey are:
- Economic growth forecasts continue to be revised lower. The combined impact of increasingly hawkish central banks and consumers squeezed by the impact of rising prices have led to downward revisions to managers’ expectations for GDP growth over the next year. The median forecast for global GDP growth fell from 3.5% to 3.0%. The forecast for US growth declined from 3.0% to 2.0%.
- Recession risks are increasing. Managers forecast for the odds of a recession over the next year have increased from roughly 20% last quarter to 35%. Their odds of a recession over the next three years increased from 50% to 63%.
- Sentiment towards equities is the lowest on record. Only 26% of managers are bullish on US equities (down from 40% last quarter) vs. 32% who are bearish (up from 13%). With respect to international equity, 24% are bullish (vs. 33% last quarter), with an equal number of bearish investors (up from 11%).
- Within equity, managers favor high quality companies, dividend payers, and cheap value stocks. 76% expect both quality and dividend yield to outperform. Only 21% are bullish on growth stocks and 16% on momentum.
- Bond investors continue to get more defensive. Specifically, they have become less negative on Treasuries. Only 43% are bearish on the sector (down from 84% last quarter). Only 22% are outright bullish, but that is an increase from last quarter’s 4%. Also, despite wider credit spreads, they remain cautious on credit. Seventy-two percent expect spreads to be wider a year from now, up from 61% last quarter.
- Inflation and the Fed are the risks investment managers remain most concerned about. Most believe that the current Fed tightening cycle will end in a recession.
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View the full survey
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This report is produced by the Strategic Investment Research Group (SIRG), a unit of PGIM Investments LLC, and a research unit of Prudential Financial. SIRG provides research, analysis, and due diligence on investment management firms and the vehicles and strategies they offer.
The SIRG Investment Manager Survey collects the insights and opinions of senior investment professionals from across the asset management industry.
This report provides an in-depth analysis of their collective views on the economy, financial markets, and other relevant issues affecting the investment community.
A total of 53 asset management firms responded and are included in this analysis. Data was collected between May 25th and June 14th, 2022.
GDP - The monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well. GDP includes all of private and public consumption, government outlays, investments and exports minus imports that occur within a defined territory.
Core CPI - Consumer Price Index (CPI) ex-Food & Energy measures the movement of prices for all items, excluding the two most volatile components, food and energy. This is often referred to as Core CPI.
The information contained herein has been obtained from sources that Prudential Financial believes to be reliable. Prudential Financial does not guarantee the accuracy or completeness of data received from outside sources, including investment managers.
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Investing involves risks. Some investments have more risk than others. The investment return and principal value will fluctuate and the investment, when sold, may be worth more or less than the original cost and it is possible to lose money. Past performance is not a guarantee of future results. Since no one manager/investment program is suitable for all types of investors, this material is provided for informational purposes only. Fixed income investments are subject to interest rate risk, where their value will decline as interest rates rise.
For financial professional use only.
1061312-00001-00 Ed. 8/2022