Bangkok--21 Jan--HSBC
***Three in four fund managers hold overweight views on equities***
***Positive outlook for US, Asia ex-Japan and Greater China equities***
Seventy five per cent of global fund managers (vs 40% in 4Q12) in HSBC’s latest Fund Managers’ survey are holding an overweight view towards equities in the first quarter of 2013 while a quarter maintains a neutral outlook (vs 50% in 4Q12). No fund manager is underweight on equities.
Over six in 10 fund managers (vs 30% in 4Q12) are underweight on cash as an asset class, while over a third (vs 20% in 4Q12) are underweight on bonds. No fund manager holds a positive outlook on bonds or cash for 1Q13.
Vineet Vohra, HSBC’s Regional Head of Wealth Development, Asia Pacific, said: “The bearish sentiment of global fund managers towards cash this quarter underlines potential opportunities in the market. They are looking at stronger prospects in equities and selective fixed income markets, based on valuation and on the back of improving economic indicators in the US and China.”
Seventy five per cent of fund managers held overweight views on North American equities in
1Q13 given the relatively resilient US economy, up from 60% in 4Q12. More fund managers are holding a positive outlook towards Asia-Pacific ex-Japan equities (43% in 1Q13 vs 33% in 4Q12) and Greater China equities (50% in 1Q13 vs 43% in 4Q12).
Vineet Vohra added: “The survey also highlights regions that continue to offer strong growth opportunities in the new year. Signs of economic recovery in the US and the bottoming out of China’s economy are pointing to potential upside in North American and Greater China equities.”
In terms of bonds, high yield and emerging market bonds continue to be favoured by the majority of respondents as investors continue to look for yield in a prolonged low-interest environment.
Asset class allocation strategy
Underweight Neutral Overweight
1Q13 4Q12 1Q13 4Q12 1Q13 4Q12
Equities 0% 10% 25% 50% 75% 40%
? North America 25% 30% 0% 10% 75% 60%
? Europe (ex. UK) 25% 30% 25% 30% 50% 40%
? Asia Pacificex. Japan 0% 11% 57% 56% 43% 33%
? Emergingmarkets 14% 20% 57% 50% 29% 30%
? Greater China 0% 0% 50% 57% 50% 43%
Bonds 38% 20% 63% 60% 0% 20%
? Global Emergingmarkets 0% 0% 38% 30% 63% 70%
? High yield 0% 0% 29% 10% 71% 90%
Cash 63% 30% 38% 60% 0% 10%
3Q12 global fund flows
Funds under management (FUM) across 10 of the world’s leading fund management houses1 polled reached US$3.87 trillion2 at the end of 3Q 2012, up by 4.6% from the previous quarter.
The survey recorded a net outflow of USD13.2 billion for equity funds in 3Q 2012, the ninth consecutive quarter, as investors remained concerned about the fragile global economy. As risk averse sentiment drove demand for fixed income assets, bond funds recorded a net inflow of USD33.9 billion last quarter, particularly global bonds and high yield/emerging market bonds.
Net fund flows3 (as a percentage of FUM):
Asset class End 3Q12 End 2Q12
Emerging markets/High yield bonds +5.3% +2.0%
Global bonds +4.0% -5.2%
Asian bonds +2.7% -0.5%
Emerging market equities +1.8% -1.3%
Europe including UK equities +0.9% +0.8%
US bonds -0.2% -2.3%
North American equities -1.1% -1.5%
Japanequities -1.9% -2.0%
Global equities -4.0% -4.3%
Greater China equities -5.2% -1.3%
Asia Pacific ex-Japan equities -6.4% -6.6%
Europe including UK bonds -9.2% -7.9%
Market performance 3Q 2012 vs 2Q 2012
All equity and bond markets except Japan equities recorded positive returns in 3Q 2012. Asia-Pacific ex-Japan equities recorded the best performance with a 9.6% growth, followed by Europe including UK equities (+8.7%), and emerging markets equities (+7.7%). On fixed income, high yield recorded 6.2% return and EM bonds went up 6.7%).