NATIXIS INVESTMENT Managers just released its 2022 institutional investors’ outlook. The firm surveyed 500 portfolio managers, asking their thoughts on what the next year might look like in the financial markets. The managers—who oversee $13.2 trillion of assets—were generally optimistic, but didn’t expect the recent torrid pace of stock market gains to continue.
The survey found that 35% of institutions plan to decrease exposure to U.S. stocks, allocating more to developed European and Asian markets, as well as emerging markets. Those findings aren’t surprising given the lofty valuations on U.S. large-cap stocks. What sort of returns can we expect? Vanguard Group recently published its latest 10-year asset class outlook. Spoiler alert: Most of the return projections are well below long-term averages.
Back to Natixis’s data: 62% of portfolio managers expect pent-up consumer demand for big-ticket items to be a significant driver of growth in 2022. A December survey from Bank of America Global Research concurred. It seems the onus is on you and me to keep swiping our credit cards.
“Cautious optimism” from survey respondents was another key theme. The majority of institutional investors expect higher volatility from stocks and bonds. They also expect economic “reopening” stocks to outperform “stay-at-home” plays.
In a not-so-rosy twist, the results show a whopping 68% of money managers predict the bull market will end once central banks—including the Federal Reserve—stop printing money. The Fed has already begun tapering its bond-buying program. Traders expect perhaps three interest rate increases next year.
Still, we should take such stock market survey data with a grain—or boulder—of salt. As famed trader Jesse Livermore once quipped, “The stock market is never obvious. It is designed to fool most of the people, most of the time.”