Institutional Investors Focus on Consumers

Institutional investors managing trillions of dollars regard consumer confidence as twice as important as any other economic indicator in the fourth quarter, according to a survey by UBS Warburg, the investment banking unit of UBS.

Twice as many fund managers, or 43%, rated consumer confidence as the most important indicator, ahead of unemployment data (21%) or interest rates and revised profit forecasts (both 18%).

Institutional investors have started switching back to equities since the Sept. 11 terrorist attacks, having held a higher percentage than usual of assets in cash and bonds. Two out of five fund managers surveyed said they planned to increase their investments in stocks, twice as many as those planning to invest more in bonds.

Fewer than one in five of the 35 institutions surveyed said they had changed their asset allocation strategy as a result of the Sept. 11 events. Still, investors said they are more interested in backing specific stocks than in making sector bets.