Rising interest rates topped investment managers' list of concerns in the latest quarterly survey by Northern Trust.
Although the report was optimistic on the whole, of the almost 100 institutional money managers queried, 62 percent said they expect rates to rise further in the next three months.
Concerns over Fed monetary policy outweighed worries over the European debt crisis, which topped the previous quarter's survey of money managers.
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Given the Fed's comments on slowing bond purchases, 63 percent of these institutional money managers also expect the Chicago Board Options Exchange Market Volatility index, or VIX, to increase over the next six months. Only 49 percent of those surveyed noted these expectations in the previous quarterly survey.
Expectations for continued strength in the housing market were fairly high at 77 percent, although down from the 88 percent who expected housing prices to rise in the first quarter of 2013.
Nearly 57 percent of the money managers surveyed in June expect stable job growth, compared to only 39 percent expecting growth in March 2013.
As for job growth expectations, only 29 percent of money managers project job growth in the next six months, a drop from the 38 percent who projected job growth in March.
The perspective on equity markets improved during the second quarter, with 77 percent of the money managers surveyed believing the U.S. money market is undervalued or appropriately valued. That's up from 73 percent in March.
Looking at International markets, in June these money managers were less concerned with the European debt crisis, with 59 percent of respondents believing European equities are undervalued, compared to 36 percent in March.
In fact, 21 percent of money managers said European equities are currently undervalued. In March, 36 percent of those surveyed said they thought European equities were overvalued, while the most recent survey found only 9 percent.
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