Illustration: Eniola Odetunde/Axios

An overwhelming majority of the world's asset managers think stocks are overvalued and expect a recession this year or in 2021, according to a survey released Wednesday by the Boston Consulting Group.

  • Many say "the current bull market is running on borrowed time."

Why it matters: The survey of more than 250 asset managers and analysts who oversee $300 billion at firms that collectively manage over $10 trillion shows the continued apprehension of investors from around the globe.

  • "The survey, conducted in November and December 2019, found that, on average, respondents’ outlook is similar to what it was just before the market correction in late 2018."
  • Even with stocks racing higher into the end of 2019, market sentiment was "nearly identical to what we found in our 2018 survey when we saw a clear shift in sentiment from bullish to bearish."
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Data: BCG 2014-2019 investor surveys; Chart: Danielle Alberti/Axios

Background: The S&P 500 has gone the longest amount of time in history without a 20% decline, or bear market, and that has a lot of money managers anxious — expecting that the good times cannot last forever.

  • BCG's survey also finds that worries about geopolitical uncertainty are adding to these fears as are the political environment and the upcoming U.S. presidential election.

Details: The stock market's historically high price-to-earnings ratio is the top concern, investors say.

  • 73% of respondents say they see markets as currently overvalued, up from 67% in the 2018 survey.
  • Among self-described market bears in the 2019 survey, 78% cited market overvaluation as the reason for their pessimism, versus 64% in the 2018 survey.

One level deeper: Fear that U.S. equities are headed for consistently weaker performance is gaining steam, with investors' expectations for total return falling to a record low of 5.6% — well below the average 10.1% annual total stock return of the S&P 500 since 1926.

  • Despite the S&P far outpacing these levels in three of the last four years, the expected return of 5.6% "roughly matches the expectation level reported in our previous three surveys," BCG analysts say in the report.

Yes, but: "Although many investors believe that the current bull market is running on borrowed time, few anticipate a major market crash or deep recession," the survey notes.

  • The 71% of respondents expecting a recession in the next two years is down from 74% in the 2018 survey.

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