Institutional investors bullish on growth and favor emerging markets

Explore the results of our client survey to find out why and to discover what other themes may shape the investment landscape in 2021.

Highlights from our survey of U.S. & Canada institutional investors

After the results of the U.S. election became clear, we asked institutional investors in the U.S. and Canada to share their views on markets, the economy, and their asset allocation plans as we head into 2021. We received 273 responses from organizations including pensions, endowments and foundations, family offices, insurers, and investment consultants.

The key findings include:

Investors see strong growth ahead in the U.S.
Nearly two-thirds (63%) of respondents believe U.S. GDP growth will be strong (2%-3%) or very strong (3%+) in 2021.
Expectations for volatility are mixed.
Just over half (52%) of respondents expect the VIX index to average moderate levels (20-25) next year, while two-fifths (41%) expect it to average high levels (25-30).
In equities, investors see the best opportunities in emerging markets.
Within equity markets, 60% of respondents selected EM as one of the regions offering the best opportunities, followed by the U.S. (52%), China (32%) and Europe (29%).
Investors also favor EM in fixed income.
Within fixed income, 47% of respondents selected EM debt as one of the asset classes offering the best opportunities, followed by high yield (37%) and distressed credit (30%).
Private markets are poised for inflows.
Nearly half (43%) of respondents plan to add to their private markets allocations, while only 4% plan to decrease their allocations.
ESG will increasingly gain traction.
More than one-quarter (27%) of respondents plan to increase their allocation to ESG strategies, while only 2% plan to decrease their allocations.

Aggregate responses to each survey question

Based on the results of the election, what are your expectations for U.S. GDP growth in 2021?

Expectations for U.S. GDP growth in 2021

 

Total Responses Count: 273. Source: Survey to USCA ICB audience powered by Qualtrics (11.30-12.02.2020)

What are your expectations for the level of market volatility (as measured by the VIX Index) in 2021?

Expectations for the level of market volatility (as measured by the VIX Index) in 2021

 

Total Responses Count: 273. Source: Survey to USCA ICB audience powered by Qualtrics (11.30-12.02.2020)

How do you plan to adjust your allocation to private markets in 2021?

Allocation to private markets in 2021

 

Total Responses Count: 273. Source: Survey to USCA ICB audience powered by Qualtrics (11.30-12.02.2020)

Given the outlook for trade and foreign policy under the new administration, are you more or less bullish on emerging markets?

More or less bullish on emerging markets

 

Total Responses Count: 273. Source: Survey to USCA ICB audience powered by Qualtrics (11.30-12.02.2020)

Given the outlook for interest rates and inflation, where do you see the best opportunities within fixed income?

Best opportunities within fixed income

 

Total Responses Count: 273. Source: Totals add up to more than 100% because respondents could select multiple options. Total Responses Count: 485. Source: Survey to USCA ICB audience powered by Qualtrics (11.30-12.02.2020)

Given the priorities of the new administration regarding sustainability, how are you planning to change your allocation to ESG strategies?

Changes in allocation to ESG strategies

 

Total Responses Count: 273. Source: Survey to USCA ICB audience powered by Qualtrics (11.30-12.02.2020)

Given the outlook for regulatory, fiscal and trade policy under the new administration, where do you see the best opportunities in equity markets?

Best opportunities in equity markets

 

Total Responses Count: 273. Source: Totals add up to more than 100% because respondents could select multiple options. Total Choices Count: 472. Source: Survey to USCA ICB audience powered by Qualtrics (11.30-12.02.2020)

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