Our sentiment reading for Europe ex-UK equities reached 68 points in February, its highest level since records began in 2005. The fund managers’ strongly bullish view on European stocks seems to be shared widely by other investors, as the asset class remains by far the most popular with European fund selectors, EIE data show.
Japan equity sentiment still on top
Still, fund managers think Japanese equities will deliver an even better return over the coming year. Sentiment for Japanese stocks has been at record highs for more than a year now, even though returns haven’t really kept up with expectations. The fund manager sentiment reading now stands at 84, only slightly down from the previous month’s record reading of 89. Fund selectors do not exactly share the managers’ optimism on the asset class, with the majority not planning to increase their allocation to Japanese stocks.
US equities appetite languishes
European equities stand out in another way: it is the only asset class that saw fund manager sentiment rise compared to January. The US equities sentiment reading halved from 22 to 11 points while the score for emerging markets equities only just avoided falling into negative territory.
Fund managers record a net negative score on just two out of ten asset classes. The reading on Asia Pacific ex-Japan equities is only slightly below zero with -5, though sentiment has been improving since August last year. The score on global government bonds has been trailing in negative territory since September 2012, with fund managers not seeming to expect an end to the bond bear market any time soon, instead putting their cards on developed market equities.
Platinum members can view the latest EIE Manager Sentiment Survey here.
The Expert Investor Europe Manager Sentiment Survey is based on data gathered monthly by Skandia from fund groups operating in Europe. Participants in January were: Allianz Global Investors, Aviva Investors, Barings, BlackRock, F&C, Fidelity, Henderson, HSBC, Invesco Perpetual, Investec, JP Morgan, M&G, Newton, Old Mutual Global Investors, Pictet, Schroders, SWIP and Threadneedle.