Investment advisers may be worried about the economy, but they see no reason to get conservative in their investment approach. Conversely, individual investors are turning far more conservative in their investing ideas than institutional investment managers.
Christopher Vella, chief investment officer for Northern Trust Global Advisors, the multi-manager business of Northern Trust Corp, said that advisers are looking for sectors “that can hold up if the economic indicators and markets continue to be weak.” A survey conducted by Northern Trust found the advisers are most bullish on the technology, energy and consumer staples sectors, as well as emerging market stocks. They are the most bearish on conservative fixed-income instruments. such as Treasuries and investment grade bonds, and the financials, utilities and materials sectors.
Nevertheless, more than half of the surveyed advisers said that U.S. equities as undervalued by more than 10%.
Investors see things differently. Earlier this year, research group Hearts & Wallets LLC surveyed 4,200 investors about their investments over the past year, and found a flight to fixed income and bank products such as annuities and certificates of deposit. This was especially true for older investors who sought “safety” from the volatile markets, said Laura Varas, a principal with the firm, in an interview. Investors increased fixed income, bank products and bonds to be the fastest-growing investment for investors over the last year.
One sign that investors are bracing for a weak economy: they say they are less concerned with inflation than they were in previous quarters, with only 20% calling it a concern, versus 43% in the second quarter and 69% in the first quarter. Only about one in five expect job growth to accelerate in coming months, compared to 37% who thought so last quarter.
Investors are also worried about their finances, with 57% saying they see opportunities to improve their financial situation as limited, and 77% who say government policies are putting the country on the wrong track.
