S&P Global Investment Manager Index™ (IMI™): Investor Risk Appetite Returns Amid Tentative Optimism For Near-Term Outlook

Summary: Institutional investors managing over $3,500 billion report a modest return of risk appetite in April, with the Risk Appetite Index rising from -16% in March to +7%, marking the first positive expectation of near-term market returns in three months. However, confidence remains subdued as fund managers navigate geopolitical uncertainties, with nearly one-in-four respondents expecting energy and supply disruptions from the Middle East war to persist beyond 2026.

Chris Williamson, Chief Business Economist and Executive Director at S&P Global Market Intelligence said:

“The announcement of the Middle East ceasefire has helped steady investor nerves, encouraging a modest revival of risk appetite among fund managers. However, confidence remains low on balance, and views on the near-term market direction are more varied than at any time for more than a year, underscoring the wide range of opinions on the duration of the conflict and its impact on energy markets and supply chains.

“Besides defensive plays, any enthusiasm for stocks is largely focused on basic materials and energy, reflecting scope for higher margins amid war-related supply constraints. Investors, meanwhile, continue to shun consumer-focused stocks, having reined in their expectations for economic growth and revised their interest rate outlooks thanks to the surge in energy prices and its anticipated impact on inflation.”

Key highlights from the report include:

The IMI's Risk Appetite Index surveyed nearly 300 institutional investors and revealed a significant recovery from March's risk aversion, climbing 23 percentage points to reach +7% in April, coinciding with the Middle East ceasefire announcement, though remaining substantially below year-start levels amid persistent war-related concerns.
Basic materials emerged as the top investor preference for the first time in nearly five years, alongside energy stocks, driven by bullishness over constrained supply and price expectations, while investors demonstrated pronounced bearishness toward real estate (at a 10-month sentiment low), consumer staples, and consumer discretionary stocks.
Commodities have become the most preferred asset class in April as Middle East conflict drives price gain expectations, while corporate credit now represents the least-favored asset class with pessimism reaching its highest level since October 2022, and sovereign debt also faces renewed bearishness.
Regional equity preferences show US equities displacing Rest of Asia at the top of year-end expectations, with Latin American stocks advancing from sixth to third place, while EU and UK equities face their most negative investor sentiment since October 2023, reflecting deteriorating confidence in European markets.
Concerns over the global macroeconomic environment reached their highest levels since September 2024, with views on US economic impact remaining negative for a second consecutive month and central bank policy shifting into negative territory for the first time in 10 months due to increasingly hawkish interest rate outlooks.

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