It has been well-documented that the two asset classes most in favour with European investors at the moment are European equities and emerging market equities (even though emerging market debt has actually captured the most inflows year-to-date).
So perhaps it’s also of little surprise that most investors believe either of these two asset classes will perform best over the next 12 months: large majorities of the audience at recent Expert Investor fora in Finland and Iceland believe emerging market equities will generate better performance than any other asset class, while Portuguese fund buyers think European equity returns will beat all others.
Asset managers are thinking along the same lines, more or less. Return expectations are highest for European equities, with a convincing majority of respondents to the Expert Investor/Old Mutual Wealth Fund Manager Survey anticipating returns in excess of 5% over the next 12 months (see graph above).
But expectations for Japanese equities are almost just as high, beating emerging market equities into third place even though return expectations for the latter asset class surged in May, reaching their highest level since Donald Trump won the US presidential elections.