Commonfund Survey Finds Investors Remain Optimistic in 2024

Institutional Investors Remain Optimistic in 2024 Despite Macroeconomic Headwinds, Commonfund’s Annual Market Sentiment Survey Finds

Seventy seven percent of institutional investors surveyed (representing over $890 billion in total assets) expect the U.S. Federal Reserve to engineer a soft landing, despite continued inflation being a top economic concern.

The U.S. presidential election and geopolitical tensions are also cited as top concerns for 2024.

Majority of investors plan to increase allocations to private equity.

WILTON, CT, March 27, 2024 — Commonfund, a prominent investment manager for institutional investors, today announced the results of its annual survey featuring market sentiments from more than 200 sophisticated institutional investors recently polled at their annual Forum, which brought together over 300 investors representing over $890 billion in assets.

The results of the survey reflect top-of-mind themes and concerns for investors in 2024 including the U.S. economy and upcoming presidential election, implications of geopolitical conflicts and rise of new technologies like AI, as well as opportunities in asset classes such as private markets and public equities.

Increasing Optimism Amid Uncertain Risk

When asked about expectations for U.S. stock market returns in 2024 versus the 10-year annualized return for the S&P 500 Index of 11.02 percent (as of Jan. 30, 2024), 45 percent of investors believe this year’s returns will be “about the same,” about a 20-point increase from 2023 when 22 percent of investors shared that view. Thirty five percent of investors expect returns will be lower than average, a decrease from last year’s 67 percent, while 19 percent expect higher returns and just one percent expect negative returns.

Half (51%) of investors surveyed find it “likely” that the U.S. Federal Reserve will engineer a soft landing, while 27 percent find it “very likely,” and 22 percent find it “unlikely.” Among the top economic concerns for investors this year, the U.S. presidential election (61%), continued inflation / interest rate adjustments (42%) and war implications, including Russia-Ukraine and Israel-Palestine conflicts (27%), were cited as the top three.

“The institutional investment community remains optimistic in Fed Chair Powell’s ability to engineer a soft landing in 2024, despite U.S. and global market uncertainty,” noted Mark Anson, CEO and CIO of Commonfund. “With the impending U.S. election and ever-shifting geopolitical environment, this will be a pivotal year that investors are, understandably, closely watching. It is promising that investors increasingly anticipate about the same or even higher than average stock market returns, a continued trend upward since 2022.”

When considering their own organizations, over half (55%) surveyed were “cautiously optimistic” about achieving target returns over the next ten years. Thirty two percent of investors indicated they are “very bullish” about their return prospects, about a 10-point increase from 2023, and 13 percent of respondents stated they are “feeling nervous,” an 8-point decrease from 2023. Additionally, across public equities, investment grade fixed income, real estate and private credit asset classes, the majority of investors are planning to keep their allocations the same, with the exception of private equity, where 45 percent of investors are planning to increase their allocations.

Anson added, “Long-term investor confidence in alternative asset classes continues to grow, as this group predicts strong returns in the future. It will be interesting to see how they perceive new investment opportunities, such as private credit and new technologies, like AI, in the years to come.”

Additional Findings Include:

• Fifty percent of investors expect private equity to deliver the best absolute/total returns over the next 12 months, a 20-point decrease from last year’s 70 percent. This was followed by public equities (48%), venture capital (35%), private credit (33%), private real assets (25%), high yield debt (13%), among other asset classes.
• Optimism in cryptocurrencies has rallied since the sharp decline in 2023. Seven percent of investors expect crypto to deliver the best absolute/total returns over the next 12 months, compared to two percent in 2023.
• Across public equities, real estate, investment grade fixed income and private credit asset classes, investors are most bullish on private credit – with 27 percent citing that they will increase their allocations.

Convening over 300 investors from the United States, Canada and the Caribbean, this year’s Commonfund Forum centered on the theme of “With Intention.” The event’s programming focused on navigating unpredictability, both in the U.S. and globally, in investment portfolios, the importance of strong governance practices in nonprofits, as well as the opportunity for AI and how to implement new technologies effectively and responsibly in business. The three-day event featured keynotes, panels and breakout sessions, including over 45 speakers such as James Bullard, former President of the Federal Reserve Bank of St. Louis and Dean of Mitchell E. Daniels School of Business, Purdue University; Ian Bremmer, President and Founder of Eurasia Group and GZERO Media; Steve Liesman, Senior Economics Reporter at CNBC; Dana M. Peterson, Chief Economist at The Conference Board; Joanne Berger-Sweeny, President of Trinity College; Anders Hall, Vice Chancellor for Investments & Chief Investment Officer at Vanderbilt University; David Hanson, CEO & Founder of Hanson Robotics; Noelle Russel, Founder and Chief AI Officer at the AI Leadership Institute; and Ken Redd, Senior Director, Research and Policy Analysis at NACUBO, among many others.  

Survey Methodology: Commonfund’s Annual Market Sentiment Survey collected answers from 203 respondents representing endowments, foundations, pension funds, operating charities, healthcare organizations, family offices and RIAs. The investors were surveyed in-person at the 26th annual Commonfund Forum, which was held in Orlando, Florida from March 10-12, 2024.

About Commonfund

Commonfund is a leading asset management firm that empowers educational institutions, foundations, pension funds, family offices, RIAs, and other sophisticated investors to achieve their most important goals. Through our Outsourced CIO business, we provide nonprofits access to world-class investment management solutions. Our CF Private Equity business provides access to private equity investments for both nonprofit and for-profit organizations seeking to diversify their portfolios with private investments. Our Commonfund Institute is among the nation’s most trusted sources for relevant, useful, and proprietary data, analytics, and best practices in financial management. All our businesses are united by a relentless commitment to investment performance matched by an equally relentless commitment to the values of trust, transparency, and ethical behavior that have inspired us since our founding more than fifty years ago. www.commonfund.org