Recent global events have failed to suppress manager appetite for growth assets, according the latest Russell Investments Investment Manager Outlook (IMO). In fact, for the first time in two and a half years Australian managers are favouring international shares over Aussie equities in a sign of increased confidence in a strong recovery across global markets.
The quarterly survey of 36 investment managers collects their top-line opinions on the direction of markets, sectors to watch and wider trends that could impact Australian investors.
Since Russell’s December 2010 IMO, managers’ appetite for growth assets has continued to develop with bullishness towards equity markets flowing through to the first quarter of 2011 with net sentiment towards international equities reaching its highest point since the inception of the IMO in 2005.
It would seem growth assets had returned to favour with managers following stronger growth being experienced in the US and signs of a European recovery well underway.
The strong Aussie dollar is making offshore assets appear cheap at current valuations and with all signs pointing to a recovery in developed international economies, managers are seeing increasing opportunities offshore.
Bulls rush in on materials and financials
Net sentiment on materials continued to be strong this quarter, reaching the highest point in the history of the IMO. Ongoing demand by China and India for Australian resources had managers expressing confidence in the strength of the sector despite the high Aussie dollar.
On the home front, financials have recovered much of the ground they lost over the last 12 months. Bullish managers on financials increased by 24.5 percentage points to 55% this survey.
Financials were looking very bearish in Q4 2010 and much of this was around fears of government policy intervention. This issue appears to have fallen by the wayside for managers this time around and the increased bullishness is a sign that people are reassured on the sector.
For more information and for a copy of the IMO please visit www.russell.com.au
