Portfolio managers believe a recession is coming

Pessimism about the prospects for the global economy over the next two years is on the rise, according to a new survey of professional investors by Boston Consulting Group (BCG).

Respondents included 260 portfolio managers and buy- and sell-side analysts who represent firms that manage more than US$12 trillion in assets.

Nearly three-quarters (73%) of managers expect a recession within the next 24 months, up from 53% in the prior survey, the firm said in release.  At the same time, just 33% are bullish about the next 12 months, down from nearly 50% a year ago.

Additionally, BCG said that managers’ expectations for average annual total shareholder return over the next three years is just 5.6%.

This expected return consists of 4.3% earnings growth, 2.1% from dividend yields and 1.2% from share repurchases, partially offset by a 2% decline in market valuations.

In this increasingly gloomy environment, managers are “spending more time making investment decisions, taking a more value-oriented approach and exiting investment positions more quickly,” said BCG.

Half of investors (48%) are actively considering environmental, social, and governance factors in their investment decision-making, “because these factors drive long-term performance,” it said.

Additionally, 82% of investors are calling on companies to take more decisive action designed to support long-term value creation.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.