A majority of the worlds leading fund managers hold positive views towards global emerging markets/high yield bonds and Asian bonds, according to HSBCs quarterly Fund Managers Survey.
The survey analyzed 13 fund managers, namely AllianceBernstein, Allianz Global Investors, Baring Asset Management, BlackRock, Fidelity Investment Management, Franklin Templeton Investments, HSBC Global Asset Management, Invesco Asset Management, Investec Asset Management, J.P. Morgan Asset Management, Prudential, Schroders Investment Management and Socit Gnrale in October and November 2011 based on funds under management (FUM), asset allocation views and global money flows. The survey found that 78% of fund managers favour global emerging markets/high yield bonds, while 63% favour Asian bonds.
Fund managers are looking to move away from equities to bonds and cash in the last quarter of the year, said the survey. While 30% of respondents maintained a positive view towards equities from 63% in the previous quarter, half of fund managers (50%) are taking an underweight view towards equities (versus 25% in Q3 2011) in the midst of continued market volatility. A fifth of fund managers (22%) are bullish on bonds (versus 0% in Q3 2011) while over half (56% versus 43% in Q3 2011) are taking a neutral view in the fourth quarter of 2011 as investors continue to look for yield in a low interest environment. Over four in 10 fund managers (44% versus 0% in the Q3 2011) are overweight towards cash in the fourth quarter, reflecting weaker investor sentiment, as the European debt crisis remains unresolved.
Geoffrey Pidgeon, head of Global Investments for HSBC in Australia said: The survey shows a significant shift in sentiment across global fund managers as prolonged uncertainty in Europe and insipid US prospects continue to hinder global economic growth. The end of the quarter will be marked by a flight to safe havens and a more cautious view on more risky assets as investors wait for things to turn in 2012. Over four in 10 global fund managers surveyed remain bullish on North American (45% versus 63% in Q3 2011) and Greater China (44% versus 57% in Q3 2011) equities and the majority hold positive views towards global emerging markets/high yield bonds (78%) and Asian bonds (63%).
With expectations of less stringent monetary policies in China, investors are staying positive on Greater China equities, said Pidgeon. The continued strength of Asian economies and higher yields from global emerging markets/high yield bonds compared to government bonds make these assets potentially appealing to investors. On the back of still resilient corporate earnings and relatively undemanding valuations, the US equities markets could also offer potential gains.
(JDC)