Just 50% of institutional investors from endowments, foundations and public pension funds feel "cautiously optimistic" they can achieve a return of the consumer price index plus 5 percentage points over the next 10 years, a Commonfund survey released Tuesday found.
Commonfund surveyed 200 participants at its annual forum earlier this month, and found that while respondents were optimistic about their own organizations, they are less so about near-term market expectations. The prospect of trade wars and protectionism had 42% of respondents the most worried over the next year or two, while 23% worry about rising interest rates.
The likelihood of a 20% market correction over the next two years had 70% of respondents somewhat concerned, and 58% expect the S&P 500 Total Return index for 2018 to underperform its 20-year annual average return of 7%.
Emerging markets private equity struck 49% of respondents as the greatest private capital market opportunity now, compared to 27% for all other private equity, 16% for venture capital and 8% for natural resources.
"The fact is, achieving CPI plus 5% will be harder as this long bull market and business cycle continue to age," said Catherine Keating, Commonfund president and CEO. As Commonfund clients approach the next cycle with portfolios at all-time highs, they should stick with their investment policies, focus on liquidity, and recognize the risk of insufficient exposure to public and private equity markets, she said.
Commonfund manages $25 billion in assets for 1,300 institutional clients.