Managers Have Expectations for Corporate Earnings Growth

Investment managers expect corporate earnings to increase in the next three months, and a majority expect global GDP growth to accelerate in the next six months, according to the second quarter 2009 Northern Trust Global Advisors (NTGA) survey of investment managers.

The poll found that 58% of managers expect global inflation to increase in the next six months, compared to just 17% of managers who held that view last quarter, according to a press release. Thirty-nine percent of participants say corporate earnings will increase in the next three months, compared with just 1% who said the same last quarter.

The survey also found a dramatic decline from first quarter in managers who believe the market, as represented by the S&P 500, to be undervalued (80% in first quarter verse 51% in second quarter).

Other survey findings, according to the press release, include:

  • 79% of managers said that they were either less risk-averse or had no change in their risk aversion in the last three months.
  • 29% and 32% of responders believe that corporate earnings will stay the same or decrease, respectively, in the next three months.
  • Unchanged from the previous quarter, U.S. small-cap equity was ranked as the most attractive investment opportunity. In a sign that managers are now willing to take more risk, second place emerging market equity and seventh place emerging market debt climbed in rankings from the previous quarter.
  • Investment managers cited technology and energy as their top two most attractive market segments, followed by health care, industrials, and consumer discretionary products. Industrials made its first appearance in the top five, edging out consumer staples.

NTGA conducted the survey of more than 70 institutional managers in mid-June.