GLOBAL - Investment managers expect global equity returns to clock in at the 10% range in 2010, helping to fuel economic recovery this year, a survey by Towers Watson found.
The 10% return expectations outpace the 6.7% managers predicted a year ago, showing strengthening optimism among managers. Investment managers expect Asian markets, excluding Japan to deliver returns of 14.5%; US, Euro zone, Australia and Japan are all expected to return 9%; while the UK will lag at 8.5%.
"The overall picture we get from this influential group is one of recovery, with established Western markets lagging the emerging markets on most measures," said Towers Watson global head of investment Carl Hess.
"In addition, there is greater optimism than last year reflected in, among other things, an increase in the expected propensity of investors to take risk in 2010 and managers' commensurate bullishness about risky assets," he added.
Managers also believe government policies in all markets except Japan will promote economic growth in the next five years.
Their views on bonds painted a different picture. Over three quarters of the managers, 77%, have bearish views on government bond returns.
In general, there was uncertainty around the bond markets, but managers expect a tightening of yields for corporate bonds versus government bonds.
Hess said: "It is not surprising that there is a high level of uncertainty in bond markets, given that we have limited experience of what happens when governments ease off the liquidity pedal."
Towers Watson surveyed 98 investment managers with a combined US$13.3trn in assets under management.
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