INVESTING/PORTFOLIO STRATEGIES

Commonfund: Emerging markets pique investor interest in 2012

Institutional investors' expectations are strong for 2012, with a particular interest in increasing emerging markets exposure, according to a survey by Commonfund.

Overall, investors expect to see their assets grow by a median 8% over the next year and a median annualized 7% over the next five years, according to the Commonfund Investor Outlook Survey.

The median forecast for the S&P 500 index for 2012 is 9%.

Survey respondents plan to increase allocations in the next 12 to 18 months most significantly to emerging market equities, as well as natural resources and commodities.

Of the 222 institutional investors surveyed from Feb. 29 to March 6, 75% expect the MSCI Emerging Markets index to outperform the S&P 500 index, while 22% expect the MSCI ex-U.S. index to outperform the S&P index.

Also, 84% expect the Barclays Aggregate Bond index to underperform the S&P 500, while 37% expect high-yield bonds to underperform it.

For survey respondents, ranking their greatest areas of concern this year in ascending order from 1 to 5, market volatility had the most rankings of 4 and 5 at a combined 69%, followed by shortfalls in meeting investment return objectives, 63%; and risk management, 38%.

The highest responses of 1 or 2 were deflation at 64% and portfolio liquidity at 50%.

A PDF copy of the survey is available from the Commonfund website.