Investment managers’ views on the US economy and corporate earnings are deteriorating due to the situation in Europe and a slowdown in China, according to a recent survey from Northern Trust.
Despite the growing negativity among managers, under 10 per cent think global risks will be sufficient to push the US into recession. In fact, one-fifth of managers expect economic growth in the US to speed up over the next six months – although this is less optimistic than managers were in the first quarter.
Greece and the eurozone continue to preoccupy managers, with nearly a third believing Greece will leave the monetary union, spreading recession abroad, and nearly a quarter thinking a country other than Greece will end up leaving.
“Growing numbers of managers expect market volatility to increase and are holding above average levels of cash this quarter, reflecting their cautious stance," said Chris Vella, chief investment officer for Northern Trust multi-manager investments.
Indeed, the majority of managers (65 per cent) expect market volatility to increase over the next six months, as measured by the Volatility Index (VIX), up from 19 per cent in Q1. Just under a fifth of managers held “above average” cash balances in the second quarter, up from 12 per cent in the first.