Investment managers have done a quick about-face in their outlook for
the large- and small-cap equity markets, according to a new survey.
In the latest
quarterly poll by Russell Investment Group, managers are dramatically
more optimistic about large-cap stocks while souring on the small-cap
universe.
Managers are now
three times more bullish on large caps than small caps-a change of
outlook that marks the largest one-quarter shift in the survey's
two-year history.
"The survey's
sharp swings reflect a growing view that rising oil prices, inflation,
a slower housing market and two years of steady interest rate hikes may
finally begin to bite," said Randy Lert, Russell's chief portfolio
strategist. "Money managers expect an environment where major
corporations will be the best performing segment of the economy, and
now appear to be aligning their expectations and investments
accordingly."
Lert said the trend line is clear: "Big is in and small is out."
Bullishness for
U.S. large-cap value stocks rose 18% during the quarter, to 54%-the largest gain for any asset class in the survey's history.
For small caps, the poll marked the largest one-quarter drop in the
survey's history, with bullishness going from 57% to 27%.