The vast majority of market participants are expecting another volatile year in 2012, but they also have an appetite for continued risk, according to a recent survey by Information Management Network.
Of the market participants surveyed, about 93 percent said they believe market volatility will remain the same or increase next year. Almost as many, 87 percent, said they had a consistent or increased appetite for risk.
“They feel that there’s an opportunity out there for them to take advantage of the volatility,” said Jacqualine Rubbo, vice president and producer at IMN, which organizes institutional finance and investment conferences. “There is, funnily enough, a bit of excitement around taking advantage of these opportunities.”
Over its 21-year history, the VIX volatility index has averaged 20.55, but this year it got as high as 48 and has recently been in the range of 30 to 35.
Respondents to the IMN survey included traders, plan sponsors, endowments, foundations, fund managers, index providers, investment consultants and others in the financial services industry.
More than half of respondents, 54 percent, said they do not plan to alter their exposure to global markets, while 39 percent said they plan to invest a larger portion of their portfolios internationally. Only 2 percent said they plan to decrease their global allocation, while 5 percent said they do not invest internationally.
Though the survey did not ask which regions interested respondents, Rubbo said she has been hearing a lot about China and about natural resources plays in places like South America and Canada.
Investors also seem to feel they’ve learned some lessons since the financial crisis. About 71 percent said they feel more prepared to combat exposure than they were in 2008.
Rubbo said investors are making sure that their allocations are aligned with their risk strategies. She added that they are asking more questions about the trading process, with pension funds inquiring about the specifics of algorithmic trading, for instance.
