FAIRFIELD, Iowa, November 21, 2017 — A new survey of institutional investors and hedge fund managers found that nearly seven in ten survey participants expect that equity markets will rise if tax reform is enacted by the U.S. Congress and an even greater percentage expect that budget deficits will also rise. In addition, only 12% of managers and investors believe that corporations will use their tax savings to expand operations or add jobs.
“Fund managers and institutional investors are strongly bullish when it comes to how tax reform would help equity prices,” says Sol Waksman, founder and president of BarclayHedge. “But, at the same time, there is little belief that the current tax reform proposals will improve the deficit or be used to grow the economy in general.”
Survey participants were asked their opinion on what would happen to equity markets if the president received what he wants in the tax bill and 68% expect the market to gain. Only 16% expect either a small or sharp drop in prices while 16% called for no change.
Tax Reform Not Expected to Boost Hiring
Survey respondents were also asked how they expected companies to apportion their tax savings and only 12% expect that corporations will expand their facilities or hire more workers with their tax savings. The great majority (78%) of respondents that corporations will increase stock buybacks or dividends, make acquisitions, or invest in more automation.
“While managers and investors expect that the adoption of tax cuts will have a positive impact on the markets and GDP, they do not believe by a long shot that these gains will result in increased investment in plant and equipment or a rise in employment,” says Ole Rollag, Managing Principal of Murano Systems. “This could be problematic for Congress, which is likely to be sensitive to any perception that tax reform will not benefit the great majority of Americans.”
The survey of 113 hedge fund managers and large investors was conducted simultaneously by BarclayHedge and Murano Systems between October 17 and October 31, 2017.
The survey is conducted monthly, with comprehensive results available here.
Sol Waksman is the founder and president of BarclayHedge. Waksman is an industry expert and experienced media source, providing perspectives on hedge fund and managed futures trends.
BarclayHedge is the global leader in providing independent, research-based information services to the alternative investment industry. Founded in 1985, Barclay currently maintains data on more than 6,600 hedge funds, fund of funds, and CTAs. No one has been in the business of collecting alternative investment data longer than BarclayHedge.
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