|Copyright:||Copyright Business Wire 2011|
|Source:||Business Wire, Inc.|
Investors’ Belief in
Spurred by growing conviction that rates will remain low, investors have reduced their cash holdings and increased equity positions, most notably in global emerging markets. Average cash balances have fallen in April to 3.7 percent of portfolios, down from 4.1 percent in March. A net 11 percent of respondents are overweight cash, down from a net 18 percent last month. A net 50 percent of asset allocators are overweight equities, up from a net 45 percent one month ago.
Appetite for emerging market stocks has bounced back with a net 22 percent overweight, up from a net zero percent in March. Asset allocators have also increased their exposure to commodities with a net 24 percent overweight the asset class this month, up three percentage points on March.
Investors are putting cash to work while displaying concerns about the outlook. The proportion of the panel believing the world economy will strengthen in the next 12 months has fallen to a net 27 percent from a net 58 percent in February. Similarly, only a net 19 percent of respondents believe corporate profits will improve in the coming year, compared with a net 32 percent in March.
Forty-two percent of the panel believes that the world economy faces below-trend growth and above-trend inflation. At the same time, a significant number, 29 percent, expects above-trend growth and above-trend inflation. Energy, frequently used by investors to hedge against inflation, has become the number one global equity sector this month. Other sector allocations indicate a preference for defensive sectors such as pharmaceuticals.
“Central banks have succeeded in re-inflating economies, but investors are split on whether they have stimulated real economic growth,” said
Emerging markets bounce back in spite of questions over
Deepening fears about the future of China’s economy have failed to quell the rebound in positive sentiment towards emerging market equities, especially in
Still, sentiment towards the region’s equities has improved. A net 22 percent of the panel says that emerging markets is the region that they most want to take an overweight position in the future, the highest reading of all regions this month.
Behind the optimism over emerging market equities is belief in the profit outlook. A net 28 percent of respondents believe that EM corporates have the most attractive profit outlook. Among global emerging markets investors,
Investors are looking favorably towards the U.S. A net 30 percent of asset allocators are overweight U.S. equities in April, up from a net 23 percent in March. A net 48 percent believes that the outlook for U.S. corporate profits is stronger than any other region.
European investors are also mirroring the global trend of increasing risk in the face of lower expectations. Concern about the future is particularly strong among European investors. Only a net 8 percent of the European panel believes the region’s economy will strengthen in the next 12 months, down sharply from a net 32 percent in March. However, cash positions fell in April to an average 3.3 percent of portfolios, down from 3.7 percent in March.
Belief in Japanese growth halts
Four weeks after the earthquake and tsunami in the northeast of
International investors have reduced their exposure to the country’s equities. A net 18 percent of asset allocators are underweight Japanese equities this month, compared with a net 8 percent overweight in March. One in six respondents is “aggressively underweight”
Calls for higher capex at five-year high
Investors’ desire to see corporates increase capital expenditure is at its highest in five years. Forty-nine percent of the global panel wants companies to prioritize capital investment over alternatives including repaying debt and increasing dividends. Only 12 percent are urging corporates to prioritize balance sheet caution, down from 18 percent one month ago.
Survey of Fund Managers
An overall total 282 panelists with
In addition, the group was named 2010 Top Global Broker (second consecutive year), Top Europe Broker, No. 2 U.S. Broker and No. 3 Asia broker by Financial Times/StarMine. The team was named Best Brokerage by Forbes/