Northern Trust Reveals Growing Optimism Among Institutional Investment Managers

(October 14, 2010) — A recent survey by Northern Trust Global Advisors (NTGA) shows institutional investment managers have improved expectations for global growth in the third quarter and see a double-dip recession as unlikely as markets stabilize.

The study revealed increased optimism among managers — 68% of managers said the US will avoid a double-dip recession, while 67% of managers expect the unemployment rate to decrease over the next six months.

“Our third quarter survey revealed some subtle but encouraging shifts in manager sentiment,” said Chris Vella, global director of research for NTGA, in a statement. “The most notable trend is toward a sense of stabilization within equity markets, as well as an uptick in global growth expectations.”

Additionally, managers expressed sentiment that the US unemployment would ease in the next six months and that financial markets would react favorably to a November election that shifts the balance of power in Congress, according to a release by the investment management business of Northern Trust Corporation. In NTGA’s survey, when questioned about whether voters should place Republicans in control of the House or Senate next month, 84% of institutional money managers expected investors to react favorably.

The study also highlighted that an increasing number of managers believe emerging markets are undervalued. Investment managers cited technology, emerging markets, healthcare, industrials and energy as the top five most attractive market segments. Energy dropped in the rankings, while emerging markets and industrials moved up in the quarter.

In terms of risk-aversion, only 8% of managers stated they are more risk-averse than three months ago, down from 31% in the second quarter. NTGA showed the number of managers who appear to be satisfied with the risk levels of their portfolio increased from 48% in the second quarter to 65% in the third quarter, the highest level since the firm began the survey in Q4 of 2008.