If you asked institutional investors what they feared most as a possible threat to the U.S. equity market, how do you think they’d reply? Terrorism? Real estate fallout? Consumer debt? In fact, the leading source of worry among pension funds and other institutional overseers of money is inflation.
That, at least, is the result of Frank Russell Co.’s March survey of 209 institutional investors. Twenty-two percent of the managers ranked inflation as the greatest threat to the equity market, followed by 20% citing geopolitical instability as the primary risk and 15% pointing to a softening real estate market. Meanwhile, nearly two-thirds (64%) of the managers said that domestic stocks generally were fairly valued and 13% thought it’s overvalued.