Institutional Investors ‘Somewhat Concerned’ US Could Enter Bear Market in Next Two Years

The closely watched Commonfund survey also shows investors are bullish on emerging markets but anticipate US underperformance.

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.



Tags: , , ,