Emerging market equities drawing ‘less cheer’
Dubai, April 26, 2011
Manager bullishness for emerging market equities fell dramatically and reached its lowest level since March 2009, according to a recent survey.
While 51 per cent of managers are still bullish on the asset class, this figure represents a significant decline from the 71 per cent who were bullish in the December 2010 iteration of the survey, said the latest Investment Manager Outlook, a quarterly survey of US investment managers conducted by Russell Investments.
Non-US (developed market) equities also saw a notable drop in bullishness, decreasing 9 percentage points from the last survey to 49 per cent.
"I believe the strong run in Emerging Markets equities may soon be over and the time for profit-taking is now," said Farid Bedjaoui, founder of Rayan Asset Management.
Aware of the growth opportunities in the Middle East, Russell has opted to partner with Rayan Asset Management to introduce Russell's investment solutions to regional institutional investors looking to diversity into global markets.
"International investors are taking note of the civil unrest in the Middle East and the impact of food inflation in emerging economies, and some have concluded that this often volatile asset class is less attractive than it once was,” Bedjaoui added.
In the latest survey, Russell asked managers whether concerns about interest rate increases over the next 12 months are affecting their investment decisions.
Just over half (54 per cent) say concerns regarding interest rate increases are indeed impacting investment decisions. Of the managers expressing concern, 30 per cent say that they are increasing exposure to equities or to other asset classes with attractive valuations.
Another 29 per cent say they are reducing their exposure to US Treasuries, and 14 per cent indicate they are reducing exposure to fixed income.
"We might be entering a new phase of rising interest rates and this is making many investors nervous about the potential impact on markets," added Bedjaoui.
Russell's Investment Manager Outlook is an ongoing survey intended to generate a meaningful snapshot of investment manager sentiment each quarter.
For the current installment of the survey, Russell collected the opinions of 180 US senior-level investment decision makers at equity investment management firms and fixed-income investment management firms.
The survey was fielded before the devastating earthquake and resulting tsunami in Japan, and so responses do not reflect the impact of this tragedy. – TradeArabia News Service