Equities, in particular those from emerging markets, are expected to be the best performing asset class over the next 12 months, according to a recent survey among UK and international journalists.
Investec Asset Management this year conducted its first ever Journalists’ Investment Sentiment Survey, questioning journalists in the financial media on the prospects for the investment landscape over the next year.
The survey revealed that in an economic environment that is characterised by divergent views, there was consensus in a number of areas.
The group listed emerging market equities as their asset class of choice for the next 12 months, closely followed by developed market equities. There seems to be general consensus that risk assets will probably rally this year on the back of an increased appetite and search for yield. Valuations also count in equities’ favour, relative to other asset classes.
From these results it is evident belief in the emerging market story is far from over, while developed markets’ equities – Europe and the US were specifically mentioned – present good value opportunities for those doing careful stock selection. The consensus seems to be that even in the midst of an uncertain global economic outlook, there are still plenty of companies that are able to “ride the surf and stay ahead of the wake”.
More than half of both the journalists and asset managers also agree that developed market bonds are likely to be the worst performing asset class for 2013. Emerging markets debt is considered a bright star in terms of fixed income assets, and was considered to be the third best performing asset class out of seven. Journalists do not expect a stellar performance from commodities and gold and ranked these towards the bottom of the pile in terms of prospects.
As far as the general outlook for the global investment environment is concerned, 39 per cent of those surveyed are “reasonably positive”. However, an average ranking of 2.78 (one being very positive, five being very negative) reflects that participants’ sentiment is finely balanced and indicative of the “risk on, risk off” environment as expressed by many.
Max King, portfolio manager, Investec Asset Management multi-asset team, says: ˜These views closely reflect the view that it is a market of stocks, not a stock-market. The gap between the best and worst performers in any index is often great.
“However, markets don’t rise in a straight line and there may be some complacency about the risks which were prominent so recently, such as the Eurozone crisis and the US fiscal outlook. In addition, benign commodity prices are not as certain as is assumed.
“Just as investors have learned to reduce portfolio turnover and invest for the longer term, portfolio shifts are becoming necessary.”
