Russell Survey: Nearly Half of Managers (47%) Say Market is Undervalued by EON


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									Russell Survey: Nearly Half of Managers (47%)
Say Market is Undervalued
Managers also Appear Acutely Aware of Risk; 73% of Managers Identify European Economic Issues as Significant
Risk to U.S. Equity Performance

June 23, 2010 10:03 AM Eastern Daylight Time  

TACOMA, Wash.--(EON: Enhanced Online News)--Nearly half (47 percent) of professional money managers
responding to the latest Investment Manager Outlook survey believe the market to be undervalued, a substantial rise
from the 28 percent figure in the March 2010 survey. Only 9 percent of managers believe the markets to be 
overvalued. The most recent quarterly survey of U.S. investment managers conducted by Russell Investments reveals
that managers see opportunity in the market’s current valuation levels but are also on heightened alert for the
downside of risk.

“Managers appear to be holding a ‘risk on, risk off’ switch and swing between loving risk and hating it, changing
preferences quickly,” said Mark Eibel, director, Client Investment Strategies at Russell Investments. “Managers
believe the market is undervalued but want to see consistently strong earnings and improved employment before
committing to ‘risk on’ again.” 

In the latest survey, 73 percent of managers named economic issues in Europe as an issue posing a significant risk to
the performance of U.S. stocks over the next 12 months. Manager bullishness for non-U.S. (developed market)
equities reflects this same concern, falling 11 percentage points from the last Investment Manager Outlook survey to
34 percent. More than half of respondents also pointed to industry regulations (53 percent) and unemployment (52
percent) as primary concerns for U.S. equity performance.

“After the market cataclysms of 2008, the economic turmoil in Europe has become the first big aftershock,” said
Eibel. “Fifteen months ago managers believed the markets had withstood a global financial crisis and that they were
looking through their rear-view mirror at a profoundly significant risk event. Now, after a strong run-up in
performance, the concern is the risk that may be ahead on the horizon.” 

Russell’s Investment Manager Outlook is intended to generate a meaningful snapshot of investment manager
sentiment each quarter. For the current installment of the survey, Russell collected the opinions of senior-level
investment decision-makers at U.S. large- and small-cap equity investment managers, as well as U.S. fixed-income
investment managers. More than 150 managers participated in this survey.

Additional findings from the Investment Manager Outlook include:

Manager preferences underscore sensitivity to risk

Revealing a mindset that has turned increasingly cautious and risk-averse, manager sentiment became more bullish
for several sectors and asset classes that are traditionally defensive in nature. Bullishness for cash rose 10 percentage
points from the March 2010 all-time survey low to 16 percent, and U.S. Treasuries also saw a 6 percentage point
increase from the last survey to 12 percent. Sectors such as consumer staples and utilities saw increases in
bullishness as well, rising 5 percentage points and 9 percentage points respectively from the last survey.

“At the time of the survey, managers saw reasons to be worried and appeared to have turned the switch to ‘risk
off,’” said Eibel. “In the latest survey, managers’ asset class preferences echo this fear in the increased bullishness for
more defensive, risk-minded areas.” 
Technology maintains stronghold

Technology continues its long run as the most-favored sector, although manager bullishness for the sector declined
10 percentage points from March 2010 to 69 percent. Bullishness for the materials and processing sector also saw a
sizable drop in bullishness of 9 percentage points from the last survey to 40 percent.

“Coming out of the recession, technology has been a popular sector because many managers were expecting an
increase in information technology spending in the United States and across the globe. The sector includes many
companies with strong balance sheets and a global customer base, both of which managers find appealing,” said
Eibel. “The global economy, however, might be growing slower than many first thought, and when the managers’ 
sensitivity to risk is heightened, they look to stocks that have performed well over the last year, such as technology,
to sell.” 

About Investment Manager Outlook

Prior to the end of each quarter, Russell polls a sample of investment managers to collect top-line opinions about
their outlook for the direction of the markets, sectors and asset classes to watch, and trends on the horizon that
could impact investment strategy. In addition to the quantitative results, the Investment Manager Outlook provides
qualitative analysis and commentary from one of Russell’s senior investment strategists. Detailed results and analysis
from the Investment Manager Outlook are available on
Advisors/Markets/InvestmentManagerOutlook.asp. For Index data, please visit

As a leader in multi-manager investing and the creator of the Russell Indexes, Russell Investments seeks to
understand capital markets and identify investment managers it believes have exceptional capabilities. To achieve
these goals, Russell’s analysts hold more than 5,000 research meetings each year with investment managers around
the world. The cumulative knowledge gained from this unparalleled access to senior-level investment decision
makers serves as the foundation for all of Russell’s products and services.

About Russell

Founded in 1936, Russell Investments is a global financial services firm that serves institutional investors, financial
advisers and individuals in more than 40 countries. Over the course of its history, Russell's innovations have come to
define many of the practices that are standard in the investment world today, and have earned the company a
reputation for excellence and leadership.

Through a unique combination of wide-ranging and interlinked businesses, Russell delivers financial products,
services and advice. A pioneer, Russell began its strategic pension fund consulting business in 1969 and today is
trusted by many well-known worldwide institutions for investment advice. The firm has $179 billion in assets under
management (as of 3/31/10) in its mutual funds, retirement products, and institutional funds, and is well recognized
for its depth of research and quality of manager selection. Russell offers a comprehensive range of implementation
services that helps institutional clients maximize their assets. The Russell Indexes calculate over 50,000 benchmarks
daily covering 65 countries and more than 10,000 securities.

Russell is headquartered in Tacoma, Washington, USA with offices in Amsterdam, Auckland, Chicago,
Johannesburg, London, Melbourne, New York, Paris, San Francisco, Seoul, Singapore, Sydney, Tokyo and
Toronto. For more information about how Russell helps to improve financial security for people, visit us at

Complete Investment Manager Outlook Results Including Disclosure Information

Russell Investment Group, a Washington, USA corporation, operates through subsidiaries worldwide including
Russell Investments. Russell Investment Group is a subsidiary of The Northwestern Mutual Life Insurance Company.

Russell Investments is the owner of the trademarks, service marks and copyrights related to its indexes.

Russell Financial Services, Inc., member FINRA, part of Russell Investments.

For real-time news updates, follow @Russell_News on Twitter.
Photos/Multimedia Gallery Available:

Russell Investments
Jordan McKerney, 253-439-1858
Matt Burkhard, 718-875-2122


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