POWERED BY MOMENTUM MEDIA
(March-2002) Fund managers bullish on Australian market
Lack of a US or global economic recovery is perceived as the greatest risk to global equity returns in 2002, according to a recent survey of global fund managers by William M Mercer. Indeed, this was listed by half of the respondents with no other risk coming close (see table below).
Mercer’s survey of around 70 managers, conducted on behalf of Super Review last month, also reveals that on average, those international fund managers brave enough to make a forecast are predicting a return of 8.5 per cent for global equities for both 2002 and on average per year over the next decade.
They were, however, more bullish about Australian equities, expecting these to rise on average by 9.5 per cent this year and by 9.9 per cent a year over the next 10 years.
The managers were also optimistic about the Australian wholesale market’s prospects. Of the 33 people that responded to the question on what type of growth they expected in superannuation funds under management over the next five years, 36 per cent said this would be high and the same percentage said this would be above average. Only four per cent believed the growth would be low.
The average forecast growth rate for the market, including superannuation guarantee contributions and investment growth, was 13.5 per cent a year over the next five years.
Mercer’s research also shows that 55 per cent of respondents offer socially responsible investment (SRI) products, mainly through individual tailored mandates. Only 12 per cent have a pooled SRI product.
Half of the managers also have hedge fund products, the most common of these being long/short equity funds or multi-strategy funds. According to Mercer, the multi-strategy products tend to consist in varying degrees of long/short equity, market neutral equity, distressed securities arbitrage, convertible arbitrage, fixed income arbitrage, and merger and event driven strategies.
All respondents said they benchmark their global equity portfolios to a range of MSCI indices. However, 42 per cent benchmark their global fixed interest portfolios to the Lehman Global Aggregate, 38 per cent to Salomon Smith Barney World Government Bond Index and 20 per cent to the JP Morgan Global Bond Index.
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