The II Fear Index: How Scared Are Institutional Investors?

Institutional investors have everything under control.

Or so they reported in Institutional Investor’s debut II Fear Index.

Ninety-four percent of the survey’s 125 respondents said that their institutions had done a good job managing their response to the Covid-19 pandemic, including 44 percent who believed that their organizations had managed the situation very well.

This includes their management of their investment portfolios, the survey found. Sixty-four percent of respondents reported that their risk management strategies had been at least somewhat effective in protecting their portfolios from March’s market downturn, while 22 percent said their risk management strategies had been very effective. Only 14 percent said their risk management efforts had proven ineffective.

Such views are in sharp contrast to institutional investors’ opinions of their national governments, with 53 percent reporting that federal officials had demonstrated poor or very poor handling of the pandemic. State and local government officials fared better, with nearly three-quarters of respondents reporting that they had managed the pandemic response well or very well.

Overall, investors said they believed that governments should still be prioritizing public health over the stability of the economy, with 66 percent saying that the health of the public is more important right now.

The results are a part of a new weekly survey of institutional asset managers and asset owners that will seek to capture current investor sentiment surrounding the markets, the economy, and government policy, as well as investors’ views on their own organizations and professional lives during the coronavirus pandemic.

In the first poll, conducted between April 16 and April 18, respondents were asked to rate government and private-sector responses to the Covid-19 crisis, identify business and market opportunities, and indicate whether they felt more or less optimistic about things ranging from the larger economy to their own compensation and job security.

For example, 45 percent said they felt less optimistic about their country’s economic prospects, compared to 23 percent who were more optimistic. (The remainder — 32 percent — reported no change in sentiment.)

However, investors seemed more confident in their central banks, with 32 percent reporting an increase in optimism regarding monetary policymakers. Just 14 percent said they felt less optimistic about their central bank’s management of monetary policy, while 54 percent felt the same.

With regards to their own careers, 31 percent were less optimistic about their near-term professional outlooks, compensation, and job security. Just 14 percent were more optimistic.

Other results from the II Fear Index poll can be viewed below.