Natixis Investment Managers has published its 2022 Institutional Investor Market Outlook, which shows that institutional managers are optimistic about 2022, but warns that many think the stock market’s current rate of growth is unsustainable.

More, 81 per cent of those surveyed say they think low interest rates have distorted valuations and 71 per cent believe current valuations don’t reflect company fundamentals, so much so that 21 per cent think valuations “don’t even matter anymore.” Of the 500 institutional managers surveyed, 71 per cent say the stock market’s current rate of growth is unsustainable; 68 per cent predict the bull market will come to an end once central banks stop printing money. “Institutional investors see plenty of growth potential in a market they say is driven and distorted by fiscal and monetary policies and which could spell trouble for unprepared individual investors,” the firm states. 

Pent up demand for big-ticket items 

According to the study, 35 per cent plan to decrease their exposure to U.S. equities going forward, allocating more to emerging markets, European and Asia-Pacific stocks. 62 per cent say they expect pent up demand for big-ticket items will be a significant driver of growth in 2022. Currently too, 81 per cent of institutional investors are investing in infrastructure. Virtually all, 97 per cent, say they plan to maintain or increase their infrastructure investments in the coming year.

“Nearly half of institutional investors expect economic growth to return to pre-COVID levels in 2022,” the firm writes in a statement announcing the publication’s release. “Supply chain disruption represents the biggest economic threat, surpassing COVID-19 as a top concern.” 

Inflation, they say, ranks as institutional managers’ top portfolio risk concern in 2022 although 61 per cent say the current spike in inflation is temporary.