Investors’ views about the US are very positive with 65 per cent saying they would buy US equities this year versus 21 per cent Europe and 14 per cent Japan, according to a poll by Schroders.
At a recent Schroders investment conference in London, 95 intermediary clients from across the Middle East and Europe were asked their top asset class and regional recommendations as well as preferred investment strategies for 2010.
Positive sentiment towards emerging markets has not changed since the same conference six months ago with 27 per cent choosing emerging market debt and 23 per cent emerging markets as their top recommendations in 2010.
Property, cash and government bonds remain the least popular asset classes and 60 per cent still consider inflation, rather than deflation, to be the greater threat this year.
There has also been a definite shift in sentiment towards currencies since October 2009 when half said that the dollar was likely to weaken during the last six months. However, 81 per cent now believe the US dollar will outperform against other major currencies over the same period. On the other hand, investors were more bullish towards the Euro but now think it is going to underperform.
One further investment trend is that half currently allocate five to ten per cent of their portfolios to absolute return fund strategies.
Richard Mountford, global head of intermediary business at Schroders, says: “Emerging markets saw record returns in 2009 and we believe that the investment case and growth potential compared to the developed world remains strong due to low levels of debt and attractive valuations supported by an increase in appetite for risk assets. Interesting too is the fact that investors are now more bullish towards the US. While the macro economic outlook is more encouraging the road is still likely to be bumpy. It is therefore understandable that investors are increasingly seeking absolute return strategies in order to protect portfolios from the impact of a volatile recovery.”
