Professional investors anticipate a correction in the equity markets, reveals new study

• More than two fifths (43%) think this correction will be as big as between 7.5% and 10%, MPG study shows 

• Investment grade fixed income predicted to benefit the most, with the biggest percentage increase in inflows from equities 

New research from international asset management company Managing Partners Group (MPG) reveals that almost all (97%) professional investors anticipate there will be a correction in the equity markets and the majority (93%) predict it could be as big as between 5% and 10%. 

Research among global institutional investors and wealth managers found that less than a third (29%) think a correction in the equity markets will take place in the next three to six months. Another third (30%) think this will happen in six to nine months, and the same number (30%) think this will happen in nine to 12 months. Around 7% say a correction will occur in a years’ time and 3% say it won’t happen at all. Just 1% predict this will happen within the next three months.  

MPG’s survey of global institutional investors and wealth managers with total assets under management of €136 billion under management found that around half (50%) of those who think there will be a correction in the equity markets think it will be between 5% and 7.5%. More than two fifths (43%) say it will be as big as between 7.5% and 10%. Less than one in twenty (4%) say it will be between 10% and 12%, and just 3% say it will be between 3% and 5%. 

Investment grade fixed income is the asset class that is predicted to benefit the most from any correction in the equity markets, the study by MPG which runs the Melius Fixed Income Fund found. This is followed by government fixed income which was ranked second highest in terms of the asset class which will see the biggest percentage increase in inflows from equities. In third place is private equity, followed by hedge funds; alternative credit; money markets; non-investment grade fixed income; real estate; renewables and in 10^th place, life settlements.  

MPG’s Melius Fixed Income Fund is a regulated mutual fund that aims to achieve an attractive level of growth whilst respecting risk diversification. It currently invests in corporate, high yield bonds and life settlements and now offers weekly liquidity and dealing frequency, as it continues to outperform its index. Previously the fund offered monthly dealing and had a 90-day notice period. It has delivered returns of 32.17% since launch in late 2019 and 4.77% in the year to date. 

That compares with returns of 1.01% in the year to date for its benchmark the iShares Core US Aggregate Bond index. Outperformance is partly driven by its exposure to fixed income in the USA, UK, Europe and Switzerland. Melius also has a yield driven investment strategy that carries less pricing sensitivity to interest rate movements. 

Jeremy Leach, Chief Executive Officer of Managing Partners Group commented: “There is growing talk of a correction in the equity markets and our research indicates that institutional investors and wealth managers anticipate this could take place as early as in the next three months and be as high as 10%. There is a range of asset classes that they believe will benefit from a correction, with fixed income topping the list. MPG’s Melius Fixed Income Fund gives investors the benefits of diversifications as well as offering weekly liquidity and dealing frequency, as it continues to outperform its index.’ 

MPG is a multi-disciplined investment house that specialises in the creation, management and administration of regulated mutual funds and issuers of asset-backed securities for SMEs, financial institutions, and sophisticated investors. It currently manages two funds with a combined gross value of $500m. 

For more information on Melius Fixed Income Fund see: https://www.meliusfund.com 

For more information on Managing Partners Group see: www.managingpartnersgroup.com