Return expectations for US equities have plummeted at record speed this year. In December, more than two thirds of asset management companies expected US stocks to deliver a return of more than 5% in the next 12 months. Now, this has come down to less than a fifth.
The fund manager outlook on European equities has gone exactly the opposite way: in October, when European stock markets were in the middle of a strong correction, bulls and bears were evenly split. Now, sentiment is at its highest ever, with a score of 71 points. This is only slightly below the all-time high registered in February, and means a majority of fund management companies believe European stocks will return more than 5% in the coming year.
Asset managers follow fund selectors
Fund managers and fund selector sentiment are now very similar, with fund selectors planning to increase exposure to the asset class where asset managers expect the best returns. But fund selectors have been setting the trend: they were already bullish on Europe and bearish on the US in the second half of last year, while fund managers only started to change their tack after Mario Draghi’s QE announcement in January.
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.