Institutional traders at leading asset management firms reveal their views on HFT, the Great Rotation and the globe’s most promising regions in a global survey conducted by Liquidnet.
Key findings:
1) 51% of respondents believe controlling the effects of high-frequency trading should be at the top of regulators’ to-do lists.
2) More than two-thirds (71%) believe the Great Rotation out of fixed income into equities could be categorized as either “in full swing” or “just starting.” The Great Rotation refers to a widely held view that record-low bond yields are prompting investors to rotate out of bonds and into stocks, boosting equities.
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3) Shifting back from emerging to developed markets: Traders chose the U.S. (56%), Europe (47%) and Asia (32%) as the regions they believe will offer the best investment potential. These findings are in sharp contrast with 2011’s findings, which favored emerging markets including Brazil and India.
While the survey found that, compared to previous years, traders are not as concerned about an increase in HFT, respondents indicate they are actively changing their trading behaviors to mitigate the impact of predatory trading strategies.
“The majority of asset management firms, who trade on behalf of the millions invested in mutual and pension funds, are fully aware of the impact that their large orders have on the market,” says Seth Merrin, CEO of Liquidnet.
“As the market evolves, traders at these firms continue to find ways to trade in size and interact directly with each other to source block liquidity and avoid falling prey to predatory HFT trading strategies.”