ING U.S. Investment Management CIOs Forecast 8-10% Rise to S&P 500 in 2013
Positive Year Expected for Emerging Market Equities
Senior Bank Loans, High Yield and EM Bonds Favored in Fixed Income
Investors Face Possibility of Markets Pricing in Interest Rate Risk Later in
NEW YORK, Nov. 14, 2012
NEW YORK, Nov. 14, 2012 /PRNewswire/ -- While U.S. markets may face
considerable volatility between now and yearend, there will be modest growth
in 2013 and an 8-10% rise in the S&P 500, according to chief investment
officers from ING U.S. Investment Management. The impending "Fiscal Cliff"
issue will continue to impact equities this year, but, once that issue is
resolved, a less choppy market is expected in 2013, with a yearend target for
the S&P of between 1550 and 1600. The senior investment professionals predict
GDP at between 2 to 3%.
"The U.S. will get past the Fiscal Cliff, and there will be more clarity in
the market next year," said Paul Zemsky, Chief Investment Officer of Multi
Asset Strategies. "Domestic equities will benefit from the strengthening in
the housing sector as well as from improvements in the labor market.
Meanwhile, Europe may continue to struggle with its economic issues for
several months, but may well come out of its recession in the first half of
Zemsky said that the U.S. market may favor value stocks, which should be
playing catch up after some years of underperformance, and this trend could
bode well for the financial sector. Emerging market equities will be another
bright spot next year, he commented, owing to such factors as China's easing
of monetary policy, its intentions to boost fiscal stimulus and the expected
change in government leadership.
"China will not have a hard landing, and this is very helpful for other
emerging market countries," said Zemsky. "A healthy Chinese economy means
other emerging market nations should continue to enjoy strong exports, helping
to fuel overall growth in emerging market economies."
In fixed income, the team prefers high yield and emerging market debt as well
as senior bank loans and cautions that a changing interest rate environment
later in 2013 may cause volatility. Christine Hurtsellers, Chief Investment
Officer of Fixed Income and Proprietary Investments, indicated that, over the
next several months, spread sectors will be a good place to earn income as
central bank policy remains very accommodative. The higher quality end of the
high yield market continues to be well positioned, with resilient fundamentals
and low default rates. Emerging markets are poised to benefit from recent
monetary and fiscal accommodation and also present good value and opportunity.
Nonetheless, later in 2013, Hurtsellers foresees the prospect of economic
growth producing volatility for many fixed income sectors, including the
spread sectors and U.S. government securities.
"The possibility of economic growth persisting next year is very real and
could lead to a reduction of the current, ultra-easy monetary policy,"
Hurtsellers said. "This change could produce volatility as the market prices
in the possibility of higher rates not only in U.S. government securities, but
also in the spread sectors that have been favored by investors over the last
In this changing environment, Hurtsellers notes that senior bank loan
investments will be attractive since they are designed to reset their yields
to reflect current interest rates. Commercial mortgage backed securities
(CMBS) and non-agency mortgage securities may also fare particularly well as
they benefit from continued improvements in U.S. commercial and residential
About this publication
ING U.S. Investment Management periodically publishes market forecasts
addressing developing trends in U.S. and international capital markets. The
views expressed in this publication are solely those of the individuals named
and do not necessarily reflect the views of ING Group, ING U.S. or ING U.S.
About ING U.S.
ING U.S. constitutes the U.S.-based retirement, investment and insurance
operations ofNetherlands-based ING Groep N.V. (NYSE: ING). In the U.S., the
ING U.S. family of companies offers a comprehensive array of financial
services to retail and institutional clients, includingretirement plans, IRA
rollovers and transfers, stable value, institutional investment management,
mutual funds, alternative investments, life insurance, employee benefits,
fixed and indexed annuities and financial planning. ING U.S. holds top-tier
rankings in key U.S. markets and serves approximately 13 million customers
across the nation. For more information, visit http://ing.us.
About ING U.S. Investment Management
ING U.S. Investment Management (ING U.S. IM) is a leading active asset
management firm. As of September 30, 2012, ING U.S. IM manages approximately
$179 billion for both affiliated and external institutions as well as
individual investors. ING U.S. IM has the experience and resources to invest
responsibly across asset classes, geographies and investment style. Through
our global asset management network, we provide clients with access to
domestic, regional and global investment solutions. For more information,
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