Despite the return of volatility, confidence in meeting investment goals has resurged as more than nine in 10 institutional investors said they would hit their targeted returns.
Some 91% of 811 investors told a survey, run by fund manager Pyramis, they believed their goals would be hit over the next five years, a large increase on the 65% who said the same in the company’s 2012 survey.
“While the travails of 2008 are far back enough for investors to feel significantly more confident that they will hit their five-year investment targets for their assets, they still remain concerned that there will be a return to volatility, as has been the case in recent weeks,” said Nick Birchall, head of UK institutional business at Fidelity Worldwide Investment, which distributes Pyramis’ products outside North America.
Birchall said the survey had been conducted in the summer of 2014, when volatility had been at its lowest level for some time. “But in the back of their mind was the worry that it could easily pick up again,” she said. “The markets have proved that this expectation may well be justified.”
Volatility cast the longest shadow on institutional investors, according to the survey. Some 22% cited it as their top concern, while investors in the UK were the most nervous, with 31% saying it was their biggest worry.
However, their peers in the US were also concerned by erratic market moves.
Just 7% of US investors agreed with the following statement: “Volatility is decreasing and market bubbles/crashes will become less frequent.”
Some 10% of their Canadian neighbours agreed, while European and Asian investors took the opposite view, with 79% and 91% respectively thinking the statement was dead on the money.
In Canada, some 60% of investors believed volatility was set to increase, a sentiment echoed by 42% of US investors; while 51% of those south of the border believed volatility—and the ensuing bubbles and crashes—would stay the same.
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