Expectations of a global economic recession have risen sharply, and risk aversion has reached a new high, according to Merrill Lynch’s Survey of Fund Managers for September.
Fear about the prospects of global economies is evident this month, as 61% of respondents believe a recession is likely in the next 12 months.
The results, collected after the U.S. Federal Reserve’s takeover of Fannie Mae and Freddie Mac, but before the failure of Lehman Brothers, show that investors have adopted more defensive strategies and shortened their investment time horizons.
Liquidity conditions (depth of market and ease of trade) have worsened, with a net 39% of respondents who rate conditions as negative compared with half of this amount in August.
Highlighting the flight to safety, the survey has found investors to be overweight bonds for the first time in more than a decade.
“Investors care little about inflation with recession on their doorstep and the banking system under pressure,” says Karen Olney, lead European equities strategist at Merrill Lynch. “They have made it clear that monetary policy is too restrictive and rates need to be cut.”
A total of 186 fund managers participated in the global survey, managing a total of US$641 billion.
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Single Women Not Prepared for a Secure Retirement
The Ninth Annual Transamerica Retirement Survey finds that many single American women are ill-prepared and unlikely to achieve a financially secure retirement if they don’t take action now.
This demographic, which makes up a majority of women in the United States, dreams of a retirement filled with traveling, pursuing hobbies, and spending more time at home with family and friends. But many may never realize these dreams and many may not be able to afford to retire at all.
Single women estimate needing a median amount of US$500,000 by the time they reach retirement. However, more than one-third report that they have saved less than $25,000 for retirement, while only one in 10 report having saved more than $100,000.
When asked how they arrived at their estimate, nearly two-thirds of single women admit they guessed the answer. Notably, only 6% completed a worksheet or calculation, or received their estimate from a financial advisor.
“Too many single women are still not saving for retirement, and those who are should be saving much more,” says Catherine Collinson, president of the Transamerica Center for Retirement Studies. “For most single women, their current savings rates are unlikely to build a large enough retirement nest egg. It’s important for everyone to conduct a proper analysis to estimate their retirement needs and to create a plan that will help get them there.”
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PBGC Appoints CIO
The Pension Benefit Guaranty Corporation (PBGC) has appointed John Greenberg as chief investment officer.
He will oversee the agency’s investment portfolio with assets of US$55 billion and be responsible for the PBGC’s new investment strategy.
Additionally, the Greenberg will take the lead in forecasting changes in volume, fund mixes and scheduled maturities of investments and supervise the agency’s investment managers.
He comes to the PBGC after 12 years at the State Retirement Agency of Maryland, where he was involved in various aspects of portfolio oversight. He most recently served as managing director for public markets.
In that role, he was responsible for all public market investments by Maryland’s retirement and pension system, including all exchange-traded investments such as fixed income, equity and publicly-traded real estate.