Around 30 Australian fund managers shared their views on market sentiment, sectors, styles and upcoming trends affecting investment strategy, with managers generally considering share markets to hold the best investment opportunities both at home and overseas.
Bullish sentiment continues to rise for both international and Australian shares, with managers preferring international shares (71 per cent) over Australian shares (65 per cent), the biennial Investment Manager Outlook Survey found. Around seven in 10 managers now consider Australian shares to be fairly valued.
“Russell’s strategists broadly agree with this [share market positivity] among signs of market recovery, but investors need to be wary of near-term risks that add uncertainty,” Russell stated.
However, managers remained bearish on asset classes, including Australian real estate investment trusts, domestic bonds, cash and the Australian dollar, the survey found.
Russell Investments director of client investment strategies Scott Fletcher said this shift in sentiment shows that managers have greater confidence in the global recovery.
“With improving US economic data and signs of growth picking up in the eurozone, it appears managers believe the worst is over and share markets can move higher in the medium term,” he said.
Three quarters of managers were positive about the Coalition election win, expecting more consistent policies and the removal of mining and carbon taxes to reduce uncertainty and increase investor confidence.
However, Mr Fletcher warned that other issues remain in the marketplace, which could create market instability in the short term, such as tapering by the US Federal Reserve and geopolitical unrest, meaning Russell remains “cautiously optimistic” on the domestic share market in the near term.
In other findings, exporters were boosted by a depreciation in the Australian dollar over the past six months, with 81 per cent of managers tipping the dollar to settle between 81 and 90 US cents in the next 12 months.
Managers continued to prefer cyclical assets on a sector level, with the biggest shifts in bullish sentiment in energy, up from 42 per cent in the prior survey to 77 per cent, and materials, up from 39 per cent to 58 per cent.
