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Pension and insurance funds expect US and Japanese equities to turn in negative returns over the next six months, according to nrpn’s quarterly investor survey, which polled 16 funds with more than €188bn under management.
The survey found that 38.5 per cent of investors expect US returns of -0.1 to -5 per cent with a further 15.4 per cent expecting returns of -5.1 to -10 per cent.
In Japan predictions were worse with the average estimate at -0.5 per cent.
More than one in four investors predict Japanese equities will lose between -0.1 and -5 per cent in the next half year, while 6.7 per cent of those questioned foresaw a loss of between -10.1 and -15 per cent.
Yet despite the gloomy predictions for two of the biggest equity markets, investors are positive about short term global growth and intend to invest more in equities.
While 40 per cent of investors were neutral about six-month growth prospects, 33.3 per cent were positive, compared to 26.7 per cent who were negative. A third of respondents said they would raise their exposure to equities, though 20 per cent said they would cut their exposure to the asset class.
Private equity is expected to receive the most interest. Forty per cent of respondents said they were planning to expand their allocation over the next six months.
The results coincide with a global survey on alternatives from Russell Investments, which suggested that over the next two years there will be major allocations towards private equity, hedge funds and real estate. It questioned 326 organisations, which included pension funds and endowments, most of which had assets of $1bn or more. Almost 70 of those were European.
“Describing the use of private equity, hedge funds and real estate as ‘alternative’ is increasingly a misnomer. The survey highlights systematic use of these strategies to enhance returns, reduce volatility and improve governance through diversification,” said Jon Bailie, managing director for alternative investments at Russell.
“Fund of funds remain the preferred route to access both private equity and hedge funds, with limited in-house investment resources dedicated to these strategies by even the world’s largest institutions.” SA
