Investment managers are gathering into a bull stampede, according to the latest findings from Russell Investments.
Investment managers are gathering into a bull stampede, according to the latest findings from Russell Investments.
The Investment Manager Outlook, a quarterly survey of approximately 300 institutional money managers, found that while most managers anticipate a slow credit market recovery, they feel optimistic about putting money back to work in the stock and bond markets.
The report, which will be made public tomorrow, found that 74% of respondents were bullish on emerging-markets stocks, and 66% were bullish on high-yield bonds.
The survey was conducted between May 27 and June 4, and included investment managers with an average of $88 billion under management.
“Managers are indicating a much higher level of comfort with risk and appear to be making a rotation from defense to offense,” said Mark Eibel, director of client investment strategies at Tacoma, Wash.-based Russell.
“To keep it simple, ‘anything but cash and Treasuries’ appears to be the rule for managers right now.”
According to the findings, the increased appetite for investments has surged since the stock market’s March 9 low.
Even with a recent string of negative days, the Standard & Poor’s 500 stock index was up 32% through Monday, from March 9.
In the March IMO survey, respondents indicated that they were relying on an improving credit situation as the lead indicator of recovery in the financial markets, but managers responding to the June survey expressed a belief that a credit market recovery was still some time away.
Sixty-seven percent of managers said they thought it would take six to 12 months for the credit markets no longer to hinder a market recovery.
“There is a healthy sense of wait-and-see balancing out the managers’ embrace of risk and their bullishness for equities nearly across the board,” Mr. Eibel said. “Taken together, the manager response seems to say that a recovery is probably under way, but the ride is still going to be a bumpy one.”
Six of 12 asset classes and eight of 12 sectors reached or nearly reached new highs for manager bullishness.
In addition to emerging-markets stocks and high-yield bonds, small-cap growth earned a 57% bullishness rating, energy earned a 70% bullishness rating, and integrated oils earned a 61% bullishness rating.
Even autos and transportation, which earned a 26% bullishness rating, saw a bullishness rating improvement from the March survey, when they earned a 14% rating.
“Although it primarily speaks to the larger story of return to risk, the manager bullishness for emerging-market equities is partially due to a resurgence in commodities prices, a weaker dollar and partially because China’s fiscal-recovery efforts are working,” Mr. Eibel said.
