More than half of chief investment officers and senior investment decision-makers at insurers worldwide expect equity market volatility to increase in the next 12 months, new research reveals.
This is a key finding of the GSAM Insurance Asset Management Insurance CIO Survey, “Seeking Return in an Adverse Environment.” GSAM Insurance Asset Management retained KRC Research, an independent research firm, to gather the sentiment of CIOs and senior investment decision-makers at 152 insurers globally (among them 37 life insurers), the companies representing $3.8 trillion in invested assets.
According to the survey, 51% of respondents expect equity market volatility to increase in the next 12 months. This compares with 45% who say that volatility will “remain the same” and 5% who expect a decrease in volatility.
The results of the poll were similar in respect to credit market volatility: 54% of respondents expect an increase, 38% expect the same and 9% anticipate a decrease in volatility.
When asked which of 10 of macroeconomic issues poses the greatest risk to their companies’ investment portfolios, three in four respondents (75%) cite the European debt crisis as a significant risk. And almost half (45%) view the crisis as the greatest risk.
Smaller percentages of respondents believe that credit and equity market volatility (17%), slow economic in the U.S. (13%) and loose monetary policies (10%) are the chief risk to their companies’ investment portfolios.
Nearly 7 in 10 of the respondents surveyed (65%) say that low yields is the greatest investment risk to their portfolios because low yields reduce their companies’ earnings.
Significantly smaller percentages of those polled cite interest rates (16%), the widening of credit spreads (9%), equity market volatility (5%), currency appreciation (3%) and liquidity risk (1%) as the top portfolio investment risk.
Nearly half of the survey respondents (48%) say that investment opportunities are “getting worse” compared to the same time last year. Fewer than four in 10 (38%) says the opportunities are about the same; and 14% say they are improving.