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Alternative Market Briefing

A majority of institutional investors expect a downturn within the next 1-2 years

Friday, April 05, 2019

Bailey McCann, Opalesque New York:

46% of institutional investors expect to see a market downturn within the next year according to the latest survey from Commonfund. The reasons for the fall include weakening consumer confidence, trade wars, higher interest rates and the growing U.S. deficit.

Looking at their own organizations, nearly half (46 percent) of all respondents remain "cautiously optimistic" that they will be able to achieve CPI + 5%, a rate of return sufficient to cover inflation, distributions and investment costs, over the next 10 years. This demonstrates little change from last year, when the 2018 Commonfund Forum survey similarly found that 50 percent of respondents were "cautiously optimistic" about achieving CPI + 5%.

58 percent of respondents believe the global stock market (as represented by the MSCI World Index) total return for year-end 2019 will underperform its 20-year annual average of 4.4 percent, further evidencing their caution at this late stage of the business cycle.

"Ten years into the current bull market, institutional investors remain understandably hesitant about their organizations' abilities to achieve CPI +5% over the next decade," said Tim Yates, Managing Director and Head of Commonfund's OCIO practice. "Since they are working against perpetual time horizons, nonprofit investors must resist the temptation to focus on the daily market moves and instead concentrate their attention on key strategic priorities, including asset......................

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