Seventy percent of institutional investors indicated they were “somewhat concerned” about a 20% correction–the typical definition of a bear market–in the US stock market, according to a closely watched survey by Commonfund. The survey polled 200 institutional investors including endowments, foundations, and public pensions earlier this month.
42% of survey respondents cited trade wars and protectionism as the greatest risk to the global economy and markets over the coming 12-24 months.
58% of all respondents expect the S&P 500 Total Return Index for year-end 2018 to underperform compared to its 20-year annual average of 7%.
Following trade wars and protectionism, 23% viewed rising interest rates, and 18% an asset bubble in a major economy as key risks.
Emerging markets continued to be bright spots for the investors. 49% of all respondents said emerging markets present the greatest private capital opportunity today, ahead of 27% for US private equity, 16% for venture capital, and 8% for natural resources.
The length of the current expansion and market cycles are also a concern. If the current market cycle was compared to the calendar year, 50% of respondents believe that we are currently in September-November and nearing the end of the cycle.