Institutional Investment Managers More Optimistic

October 13, 2009 ( - Institutional investment managers polled by Northern Trust Global Advisors (NTGA) in the third quarter of 2009 expressed near-consensus optimism on the economy - the most optimistic economic expectations from investment managers since the quarterly poll was begun a year ago.

A press release said 83% of managers expect corporate earnings to increase in the coming quarter and 84% believe that global growth will accelerate in the next six months.

Reflecting a stabilization of portfolio positioning, 53% of managers indicated they have no change in risk aversion and 88% say they are now within their normal range of cash holdings – a switch from previous quarters, when managers continued to increase risk and decrease cash positions at the margins.

Investment managers specifically cited the technology, energy, industrials, health care, and materials sectors as their top five most attractive market segments, according to the press release.   The materials sector made its first appearance on the top-five list, edging out consumer discretionary.

Other major findings from the survey include:

  • 46% of managers still believe that the Standard & Poor’s 500 Index is undervalued.   The group of managers who believe that the market has room for growth is more than double the size of those (20%) who believe the market is overvalued.
  • Managers, still hesitant to call a buoyant V-shaped recovery, see potential fragility in the system. Three-quarters (76%) of survey respondents expect interest rates to hold steady, reflecting a view that central banks will be hesitant to raise interest rates for fear of choking off early signs of recovery.
  • 53% of managers now expect global inflation to remain the same for the next few months, compared to 42% who expressed the same opinion in the previous quarter.

The survey of more than 60 institutional managers was conducted in mid-September.