Just more than half of institutional money managers used by Northern Trust Global Advisors expect greater volatility in the stock market over the next six months, while many remain bullish on global growth and corporate profits.
The survey of more than 90 institutional managers shows that 61% expect global growth to accelerate over the next six months, and 87% believe corporate profits will increase during the same time period.
Also, 32% believe interest rates will increase during the next quarter, and 46% expect increased global inflation in the next six months.
“Managers continue to be optimistic, which is good,” Chris Vella, NTGA global director of research, said in a telephone interview. “The only area that showed some change and surprised us a little bit was the volatility.”
He noted that about a third of institutional managers have anticipated increased volatility in the last three quarters.
Ninety-one percent of managers in the current survey predicted an increase in mergers and acquisitions activity over the next six months. Also, 46% said the S&P 500 was undervalued, 53% said that of Japanese equity markets and 32% said the same about emerging markets.
Despite anticipation of increased volatility, 55% said they have made no change in risk aversion and 78% made no changes to the concentration of their portfolio.
Technology, health care, energy, consumer discretionary and industrials were identified as the most attractive market segments.