Institutional investors continue to be uncertain about the global economy, a new Towers Watson survey says.
In the 2015 Global Survey of Investment and Economic Expectations, respondents said they expect the U.S. economy to continue recovering, and predict a 5.5% U.S. unemployment rate within the next year, but eurozone unemployment is expected to remain in the double digits in 2015.
Overall, of the 101 money managers, economists, strategists and market analysts in North America, Europe and the Asia-Pacific region surveyed in November and December, 71% said the situation in the eurozone is fragile in 2015, up from 44% in 2014.
Respondents were divided by market about how strong they expect equity returns to be in 2015, expecting the strongest returns in Japan at 9%, followed by China at 8.5% and the U.S. at 7.2%. The regions where they expect lower returns are Switzerland at 5.7%, Canada at 5.4% and Australia at 4.9%.
Respondents also responded differently when discussing short-term and long-term investment outlooks due to short-range economic outlooks. In the short term, 34% said absolute-return strategies were important; 31% saying alternative strategies were important; and 22%, bond strategies.
However, in the long term, respondents said absolute-return, alternatives and bond strategies will decrease in importance, with 19%, 17% and 6%, respectively, finding those strategies important.
Of all asset classes, 73% of respondents were bullish on public equities for the next five years, compared to 78% in 2014, and 70% were bullish on emerging markets compared to 76% in 2014. Eighty-three percent of respondents were bearish on nominal government bonds over the next five years, compared to 81% in 2014.
Twenty-five percent of respondents believe their institutional clients will be more aggressive in 2015, compared to 44% of respondents last year. The percentage of respondents who said their institutional clients will make no changes to their portfolio risk levels increased to 41% this year, compared to 27% last year.