Despite the promise and optimism of COVID-19 vaccines, professional investors continue to worry about the pandemic's economic impact, a global study of 400 reveals.
Natixis Investment Managers' annual 2021 Professional Fund Buyer Outlook, conducted between November and December 2020, shows six in 10 participants believe the COVID-19 new normal is here to stay.
Two-thirds expressed a more pessimistic outlook, believing that the global economy will not recover from COVID-19 in 2021.
A majority (60%) said policy makers in their home country have been ineffective in their response to the pandemic. However, investors in Asia (66%) buck the trend, saying that policy makers' response was effective.
Other top areas of concern that may affect investment decisions for investors in the Asia region include negative interest rates, volatility, and deflation.
The surge in the number of retail investors using apps like Robinhood that allow for low- or no-cost trading was evident during the pandemic.
"With markets delivering strong performance throughout the pandemic, 80% say retail investors have been taking on risk more carelessly than before COVID-19. As a result, almost eight in 10 (78%) worry that the increased volatility will lead individuals to liquidate their investment prematurely," the report read.
Despite the stock market rally in the second half of 2020, only one-third of the total surveyed (34%) see a correction coming in the next 12 months. The same number predict a correction may be in the wings for bonds, while only 32% see Special Purpose Acquisition Companies (SPACs) heading into correction territory.
Those in Asia predict cryptocurrency will experience a correction, while investors in the UK believe the tech sector should brace itself for a correction.
Natixis Investment Managers Australia chief executive Damon Hambly said last year marked extreme challenges for markets that went beyond the health pandemic, including climate events and natural disasters, political tensions and the fastest market correction in history.
"Uncertainty continues and concerns are mounting that financial markets may have entered bubble territory. However, fund selectors surveyed view market risk as an opportunity, while acknowledging close analysis is required to uncover the opportunities to generate alpha for clients," he said.