The decision was made after their research showed investors are continuing to favour growth assets and they are concerned about the poor returns of traditional fixed income holdings.
“Managers are continuing to favour equities over more defensive assets, and we believe that relative to bonds, shares still compare well,” Russell director of client investment strategies Scott Fletcher said.
The asset management firm also found 80 per cent of investment managers believe the Australian share market is fully priced.
“The local share markets [are] beginning to push past fair value after the double digit returns of 2012 [and] we expect more modest performance for the rest of the year,” Mr Fletcher said.
The results of this survey indicate fund managers are seeing the greatest investment opportunities in equity markets overseas.
“Despite expected ongoing global volatility, the major economies of the region – China, Japan and Australia – all have a positive outlook for the remainder of the year,” Graham Harman, Russell’s senior investment strategist for the Asia Pacific said.
Russell believes there is the potential for a rebound in China, and Japan is also implementing favourable policy initiatives.
“China stands to benefit from its government’s commitment to infrastructure and expanding consumption base, while we expect Japan to receive a boost from export growth and increased competitiveness in general,” Mr Harman pointed out.
Russell’s strategists also hold a positive view of US equity markets for the coming 12 months because of the growth rate of between 2 and 2.5 per cent and a rebound in housing prices.
The group also plans to change its fixed income holding away from traditional interest rate instruments such as US treasuries, German bonds or Japanese government bonds, and focus more on alternative and emerging market bond strategies.
However, the group cautions optimism as they still see a lot of ongoing volatility caused by the Euro-zone and dangers over the fiscal tightening likely to occur in the USA.
