Amid increasing market volatility related to the coronavirus pandemic, investors are split in terms of confidence that they’ll be able to meet their portfolio objectives over the next year, new research from Greenwich Associates shows.
The research firm surveyed institutional investors on how confident they are about achieving their portfolio objectives and what they need from investment managers right now.
As of March 25, investors’ confidence that they would achieve their portfolio objectives for 2020 was, on average, a 4.9 out of 10, with 10 being the most confident, according to Greenwich. The range of investors’ answers was large: some answered 1, while others answered 9.
“Some are still kind of trying to be optimistic and think about this as much more of a short-term blip,” said Sara Sikes, principal at Greenwich Associates, by phone Friday. “The people at the bottom presumably think that this is going to have a dire effect. Our interpretation is that it demonstrates the uncertainty that exists right now.”
Where investors converge, though, is in their view of the long term.
On average, investors said that for the next three-to-five years, their confidence in their ability to achieve desired portfolio outcomes is 8.1 out of 10, the data from Greenwich showed. The range of responses in this category was much smaller, with the lowest being 6 and the highest being 10.
“What we saw as the good outcome is despite that wide range of uncertainty, on a long-term perspective, investors are maintaining the course that they should,” Sikes said.
Greenwich also polled investors on what they thought the most useful information they could be receiving from managers right now would be. Investors could choose more than one response to the question.
According to Greenwich, 69 percent of respondents said that specific commentary on how the market downturn is impacting their own portfolios is among the most useful information to be receiving from managers right now.
This, according to Sikes, is in line with the typical response from institutional investors. But what was surprising was the second-most popular response: Fifty percent of survey respondents said that among the most useful information they could receive from managers is on the actions being taken internally to protect the manager’s business.
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“They want to make sure managers are doing the right thing,” Sikes said. She added that investors specifically want details on how managers are handling cybersecurity and business continuity planning, among other operational details.
“It has risen up the list because it matters more in a crisis,” Sikes said.