Portfolio managers believe recession is near.
by James Langton
Investor expectations for total shareholder returns are at historically low levels
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.
It 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.