Global fund managers turn cautious in 4Q11

Global fund managers are looking to move away from equities to bonds and cash in the last quarter of the year, according to HSBC’s latest Fund Managers’ Survey.

While 30 per cent of respondents maintained a positive view towards equities
in 4Q11 from 63 per cent in the previous quarter, half of fund managers (50 per cent) are taking an underweight view towards equities (vs 25 per cent in 3Q11) in the midst of continued market volatility.

A fifth of fund managers (22 per cent) are bullish on bonds (vs 0 per cent
in 3Q11) while over half (56 per cent vs 43 per cent in 3Q11) are taking a
neutral view in 4Q11 as investors continue to look for yield in a low interest

environment.

Over four in 10 fund managers (44 per cent vs 0 per cent in 3Q11) are
overweight towards cash in 4Q11, reflecting weaker investor sentiment as the
European debt crisis remains unresolved.

HSBC’s quarterly Fund Managers’ Survey analysed 13 of the world’s leading
fund management houses in October and November 2011 based on funds under management (FUM), asset allocation views and global money flows.

Head of Retail Banking & Wealth Management at HSBC Singapore, Paul
Arrowsmith said: “The survey shows a significant shift in sentiment across
global fund managers as prolonged uncertainty in Europe and insipid US prospects continue to hinder global economic growth.

"The end of the quarter will be marked by a flight to ‘safe havens’ and a
more cautious view on risky assets as investors wait for things to turn in
2012," he said when commenting on the survey here today.

Over four in 10 global fund managers surveyed remain bullish on North
American (45 per cent vs 63 per cent in 3Q11) and Greater China (44 per cent vs 57 per cent in 3Q11) equities, and the majority hold positive views towards Global Emerging Markets/High Yield bonds (78 per cent) and Asian bonds (63 per cent).

Thirty per cent of respondents turned bullish towards US Dollar bonds from
0 per cent in the previous quarter.

Arrowsmith added that while fund managers have scaled back on their
overweight views for all asset classes across various geographies, the survey
also points to selective growth opportunities.

With expectations of less stringent monetary policies in China, he said
investors are staying positive on Greater China equities.

On the back of still resilient corporate earnings and relatively undemanding
valuations, the US equities markets could also offer potential gains.

"The continued strength of Asian economies and higher yields from global
emerging markets/high yield bonds compared to government bonds make these assets potentially appealing to investors," he added.

Arrowsmith said: “Customers who have been used to investing in a
relatively more predictable environment where sentiment was less likely to cloud investment choices will find these times challenging."

He said it is important for today’s investors to focus on realistic wealth
goals and take a long-term approach to investing.

"The key to weathering the current investment climate is to stay close to
your portfolio and together with a trusted professional adviser, regularly
review your asset allocation strategy to aim for balanced and diversified
holdings," he added. -- Bernama