Investment Managers Plan to Stay the Course in 2012

Seventy percent of investment managers expect a similar level of volatility as in 2011 to continue through 2012.

According to the latest Investment Manager Outlook (IMO) survey conducted by Russell Investments, of those 70%, 63% say that despite these expectations they are not planning any changes to their portfolio positioning. Managers that feel volatility will be tempered in 2012 are in the minority at 30%, and reasons cited include expectations for successful resolution of issues in Europe and other macroeconomic uncertainties.  

In the latest survey, nearly half of managers (49%) indicated they believe the market to be currently undervalued and 45% see it as fairly valued.  

Likely echoing concerns around continued volatility in Europe, bullishness for non-U.S. developed market equities saw a 12 percentage point decrease from the September 2011 iteration of the IMO survey to 33% – the lowest point since March 2009.  

U.S. large cap growth equities (58% bullishness) and emerging market equities (56% bullishness) saw major drops in manager bullishness, 15 and 18 percentage points respectively, compared to the September 2011 survey. At 61% bullishness, U.S. large cap value equities led in terms of manager bullish sentiment, and other value equities saw notable increases – with U.S. midcap value (51% bullishness) and U.S. small cap value equities (45% bullishness) increasing 13 and 10 percentage points respectively from September 2011.  

High-yield bonds (50% bullishness) and corporate bonds (41% bullishness) also saw considerable gains in manager bullishness in the latest survey, up 12 and 8 percentage points respectively since September 2011.  

At 73% bullishness, the technology sector continues its long-standing run as the most-favored sector amongst managers surveyed for the IMO, up two percentage points from September 2011.  

The consumer discretionary sector saw the largest gain in bullishness, rising nine percentage points to 50% bullishness. Most other sectors saw minor drops in bullish sentiment, including healthcare (down seven percentage points to 47% bullishness) and financial services (down seven percentage points to 31% bullishness).  

More information about Russell's Investment Manager Outlook is available here.