The next largest group (35%) are calling for a U-shaped recovery with 3-5 years of moderate pick up before clearer signs of acceleration.
“The lockdown has had a massive effect on the markets and in terms of the recovery, our members are more cautious on the form it will take compared with others in the financial services industry who have been more bullish,” said Margaret Franklin, CFA, President and CEO, CFA Institute. “When it comes to the effect of volatility on their strategic asset allocation, a clear majority of respondents have reported their firms are either adopting a ‘wait and see’ approach with their portfolios or have made no changes.”
Risks ahead
The report shows that 96% of respondents are concerned of mispricing of specific assets, driven by two underlying factors: liquidity dislocation (38%), of greatest concern to respondents in Asia, and distortion of natural market pricing due to government intervention (36%), of greatest concern to respondents in North America and Europe.
For investment-grade corporate bonds in developed markets, 76% believe liquidity is down.
