FMS Investors – Biggest “Tail Risk” FMS investors view geopolitical conflict as the biggest “tail risk” for the global economy, given their concern about its potential adverse impact on financial markets and investments. Image: BofA Global Fund Manager Survey
Sentiment – Risk Appetite and Expected U.S. Equity Market Performance U.S. equity investors’ risk appetite has declined in July, marking a shift towards net risk aversion not seen since January. Investors have also grown increasingly pessimistic about the prospects for near-term returns. Image: S&P Global Market Intelligence
Sentiment – Global Equity Risk-Love The current reading of the Global Equity Risk-Love indicator at the 96th percentile signals a high level of optimism in global equity markets, indicating a need for caution and effective risk management strategies by investors. Image: BofA Predictive Analytics
Global Market Implied Equity Risk Premiums Equity risk premiums are currently low, particularly in the United States, indicating a less attractive market environment where investors may not be adequately compensated for the risks associated with equity investments. Image: Goldman Sachs Global Investment Research
Risky vs. Safe Assets Fund Flows Risky vs. safe assets fund flows remain negative suggesting that investors perceive greater risks associated with risky assets and are opting for safer assets over risky ones. Image: Goldman Sachs Global Investment Research
Risk Appetite Indicator Level and Momentum Factors The risk appetite indicator is slightly positive, indicating that investors are exhibiting a moderate level of risk-taking behavior in the market. Image: Goldman Sachs Global Investment Research
Risk Appetite in Flows After Adjusting for Seasonality and Cyclical Growth Market sentiment is currently robust, with risk appetite in flows at the 85th percentile, falling short of extreme levels. Image: Deutsche Bank Asset Allocation
Risk Appetite Index As investors embrace a more aggressive stance, the risk appetite indicator is back to elevated levels, signaling a willingness to take on higher levels of risk for potentially greater returns. Image: Goldman Sachs Global Investment Research
S&P 500 Equity Risk Premium Despite potential in U.S. equities, the decline in equity risk premium suggests caution is needed, prompting diversification across asset classes for risk management. Image: BofA Global Research
Sentiment – Global Risk Demand Index The Morgan Stanley Global Risk Demand Index indicates that investors’ risk appetite is high, as it remains stretched, suggesting an elevated demand for risky assets. Image: Morgan Stanley