Almost all (97 per cent) professional investors expect there will be a correction in the equity markets over the next 12 months, with 93 per cent predicting it could be between 5 per cent and 10 per cent.

According to Managing Partners Group’s (MPG) survey of wealth managers and institutional investors, 29 per cent believed a correction in the equity markets would take place in the next three to six months.

A further 30 per cent expected it to happen in six to nine months, while the same proportion thought the correction would occur in nine to 12 months.

Around 7 per cent anticipated it happening in a year’s time and 3 per cent felt that it would not happen at all.

Just 1 per cent forecast that the correction would take place within the next three months.

When asked about the potential size of the correction, half (50 per cent) of professional investors who thought it would occur predicted it would be between 5 per cent and 7.5 per cent.

More than two fifths (43 per cent) said it could be as large as between 7.5 per cent and 10 per cent, while 4 per cent expected it to be between 10 per cent and 12 per cent, and 3 per cent predicted a correction of 3 per cent to 5 per cent.

MPG found that investment grade fixed income was the asset class professional investors expected to benefit the most from any correction in the equity markets.

Investors ranked government fixed income as the asset class that would see the second largest percentage increase in inflows from equities, followed by private equity; hedge funds; alternative credit; money markets; non-investment grade fixed income; real estate; renewables; and life settlement.

Commenting on the findings, MPG chief executive officer, Jeremy Leach, said: “There is growing talk of a correction in the equity markets and our research indicates that institutional investors and wealth managers anticipate this could take place as early as in the next three months and be as high as 10 per cent.

“There is a range of asset classes that they believe will benefit from a correction, with fixed income topping the list.”

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