What’s keeping ASX 200 investors awake at night?

The ASX 200 has had a terrific run over the past months. So what concerns are keeping investors and fund managers awake at night?

falling asx share price represented by girl falling asleep at her computer

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If you have money invested in S&P/ASX 200 Index (ASX: XJO) shares and you’re losing sleep at night, you may want to alter the risk profile of your portfolio.

That’s according to an age-old investor adage, which says you should be comfortable with the risks you’re taking with your money. If you’re tossing and turning at night thinking about your ASX 200 shares, it means you may have too much — or too little — invested in the market.

The solution for you and me is pretty simple. A few minutes on your online trading account or a quick call to your broker and you can adjust your share market exposure to your comfort level.

But spare a thought for the world’s fund managers. Men and women with many millions, if not billions, of other people’s dollars in their hands. Money that they’ve been tasked with putting to good work.

What’s keeping them awake at night?

For an answer to that, we turn to Bank of America Corp’s latest fund manager survey.

COVID-19 booted to fourth place

The Bank of America survey polled 200 fund managers with more than $700 billion of combined assets under management for its monthly survey in April.

The survey revealed that the global pandemic is no longer the fund manager’s number 1 bogeyman.

With the rollout of vaccines underway, the fund managers’ top concern is the so-called taper tantrum. That’s where the US Federal Reserve and other leading global central banks scale back their quantitative easing (QE) programs sooner and more aggressively than they’ve signalled. This could see share investors rushing for the exits as it would lead to rising interest rates.

Second on the list of fund managers’ concerns is inflation. Should inflation return with more vigour than the central bankers have been assuring us it will, this could force the central banks’ hands. To keep inflation in check they may have little choice but to raise interest rates. Again, this would raise the cost of money and make assets outside the share markets (like bonds and cash deposits) relatively more attractive.

Higher tax concerns also beat out COVID-19 for what’s keeping the polled fund managers awake at night. Though tax hikes may be some ways off in Australia, newly elected US President Joe Biden has already indicated his intentions to unwind some of former President Donald Trump’s corporate tax cuts.

Whether corporate or income or sales, higher taxes mean less money in the private sector and tend, at least in the medium term, to present headwinds for share prices.

ASX 200 retail investors

Having admittedly not conducted any polls among retail investors on the ASX 200, I’ll go out on a limb and say the same 4 concerns listed by the fund managers above are likely on your list as well. If not in the same order.

But unlike the fund managers, we have the option to be far more…or less…nimble.

As a retail investor, you don’t have to meet any benchmarks, except those you set for yourself.

So let the fund managers fret about their top concerns. If you’re finding yourself anxious about your allocation to ASX 200 shares then adjust your exposure as you feel best. And enjoy a good night’s rest.

Happy investing.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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