Managers View Market as ‘Risk-On’ Opportunity

This is a change from the previous quarter’s IMO, where uncertainty around risk prevailed, according to the latest Investment Manager Outlook (IMO) quarterly survey from Russell Investments.

This quarter, managers’ bullishness for U.S. large-cap growth equities was at 69% (up from 58% bullishness in the December IMO), and on the emerging markets front, there was a 10 percentage point increase in bullishness from last quarter to 66% in the current survey. Across style and cap levels, the latest IMO survey demonstrated managers’ increased bullishness for equities.

“Managers are seeing opportunities to take on moderate risk for what could be attractive return opportunities. In fact, in the latest IMO survey we are seeing that they are more willing to invest in areas where, even six months ago, they were showing nervousness,” said Rachel Carroll, consulting client executive at Russell Investments. “Seeing professional money managers making these dynamic shifts in a relatively short-term window underscores the importance for investors of having multi-asset portfolios that offer the flexibility to take advantage of these potential opportunities.”

Reduced risk aversion and a search for better returns may also be driving the drop in bullish sentiment for corporate bonds and other fixed-income asset classes in the latest iteration of the IMO. Manager bullishness for corporate bonds was 32% and U.S. Treasuries was 4%, reflecting a drop of nine and five percentage points, respectively, from last quarter.