Our investor polls reveal the market and macro themes to watch

We asked more than 150 investors from around the world at our recent investment conference which themes they believed will be most important for the coming 12 months.

Emerging markets (29%) and multi-asset solutions (21%) were the top areas of interest. To a lesser extent, credit (corporate bonds) and liquid alternatives also ranked well.  

Source: Schroders, 22 September 2017

When it came to where investors would add risk today, almost half (46%) selected European equities. Global equities were also favoured, indicating that 76% of investors would add equity market exposure. Conversely, only 4% selected fixed income. 

Source: Schroders, 21 September 2017

Taking a long-term view, investors believed that technological disruption, the end of quantitative easing (QE) and climate change are likely to have the greatest impact on portfolios. Populism was another factor which investors believed will have a major impact. In contrast, none anticipated that Brexit will have a significant impact on investment portfolios. 

Source: Schroders, 21 September 2017

Turning to macroeconomic policy, we polled investors on their expectations for central bank policy in the US and the eurozone.

The Federal Reserve (Fed) had announced its plans for quantitative tightening on the eve of the conference, as anticipated. Starting in October, this process will see the reversal of the $3.5 trillion QE programme deployed between 2009-2014.

However, against expectations, the rate-setting committee at the Fed indicated that it may increase its key interest rate in December, even though inflation remained below its target level.

Against this backdrop, a majority of investors (66%) took the view that the next interest rate rise will be at the end of this year, and 29% expect it to be in March 2018. 

Source: Schroders, 21 September 2017

Looking further out, we asked the investors gathered in Madrid how many interest rate hikes the Fed would implement before the end of 2018.

Despite increased expectations for a tightening of US monetary policy in December, the majority of those polled did not foresee a more aggressive pace to Fed policy normalisation in the next 12 months.

59% of investors did not expect more than two hikes, with only 10% forecasting four rate rises.

Source: Schroders, 21 September 2017

Moving to Europe, the European Central bank (ECB) had left its monetary policy unchanged at its September meeting. It is expected to announce its plans for the withdrawal of its QE programme in October.

With this in mind, we asked investors when they expect the ECB will next increase interest rates.

The majority of investors (57%) did not expect the ECB to increase its key policy rate until 2019, the point at which markets currently anticipate it will have finished withdrawing its QE programme.

However, over a quarter (27%) believed that a rate rise may take place earlier, at some point in 2018.     

Source: Schroders, 21 September 2017