CFA Institute Member Survey Predicts Slow Recovery

CFA Institute, the global association of investment management professionals, surveyed its global membership to analyze the effects of the current economic crisis caused by the coronavirus pandemic on the economy, the financial markets, and the investment management industry. The survey found that CFA Institute members in general share a rather conservative view of the potential recovery, with close to 80% of respondents thinking any recovery will be slow or stagnant in the short term before picking up eventually in the medium term and a plurality forecasting a “hockey-stick shaped” recovery.

“Our members around the globe are uniquely positioned to opine about what the economic recovery might look like,” said Margaret Franklin, CFA, President and CEO of CFA Institute. “Our members lead the investment profession’s thinking in critical areas like portfolio management, capital markets integrity, and practice excellence. That’s exactly what the financial industry and clients need at this trying moment as we seek to analyze the underlying economic trends as they continue to unfold.”

The data shows that the majority of charterholders sit on the conservative side of the spectrum with respect to the speed of the recovery, as compared to several industry and banking CEOs, some of whom have come out recently with an optimistic viewpoint. Of the more than 13,000 respondents, 44% see a medium-term, so-called hockey stick-shaped recovery, which would imply some form of stagnation for two to three years before a steady pick up. 35% of the respondents see a so-called U-shaped recovery, essentially only mildly more optimistic in the short term than those predicting a medium-term recovery. Only 10% envision a quick recovery, also known as V-shaped. 8% see a longer-term hockey stick recovery over five to 10 years. And 4% predict long-term economic stagnation. (Note: numbers do not sum to 100 due to rounding). The survey showed no significant regional differences in the expected shape of the recovery.

“The economic crisis we are currently going through is unprecedented in the sense that the lockdown was a common and voluntary societal response to the medical emergency caused by the coronavirus, which has brought significant pain to the global economy and challenges the foundations of capital markets,” said Olivier Fines, CFA, Head of Advocacy EMEA for CFA Institute. “The question will, therefore, become how long can the economy sustain such radical measures before it gets structurally and irreparably damaged?”

The full membership survey, which will be released at a later date, explored:

•        The economic situation and the potential recovery;

•        The market impact on volatility, liquidity and price formation;

•        The interventionism of governments and central banks;

•        The regulatory response;

•        An overview of ethics in times of crisis;

•        The impact of the crisis on the asset management business model and the role of finance;

•        Whether the crisis is changing anything to the active versus passive debate;

•        And a preliminary analysis of members’ employment situation.

The survey was fielded to the global membership of CFA Institute across all regions and jurisdictions where the organization has representation. The survey was sent on 14 April 2020 and closed on 24 April 2020. A total of 167,312 individuals received an invitation to participate. Of those, 13,278 provided a valid answer, for a total response rate of 8%. The margin of error was +/-0.8%.