Managers cautious: survey

Andrew Pease

Australian fund managers are now looking to the home front for growth, with the latest Russell Investment Manager Outlook released today revealing they have shifted their preference away from international equities and towards Australian shares.

However, the Russell research also suggests that they have become increasingly negative towards small caps, financial, industrial and bonds as they rearrange their exposures in light of concerns about the sub-prime crisis.

Russell said the shift in sentiment had followed more than two years of strong preference for global equities by local fund managers who had shown a consistently bullish attitude to global markets.

However, it said that while Australian equities had returned to favour, managers remained hesitant about the medium-term outlook, with a quarter of the managers surveyed saying they believed the S&P/ASX 200 would start the new calendar year from 6,000 to 6,500, which is broadly within its present range.

It said nearly a third of managers had taken a more bearish view, suggesting it would open the year at below 6,000 while less than a quarter believed it would start the year above 6,500.

Commenting on the survey outcome, Russell senior investment strategist Andrew Pease said fund managers had generally become more defensive as a result of the market volatility, but there was also a sense that the shake-out had returned some value to the Australian equity market.

“In net terms, managers are still more positive on international equities compared to local stocks,” he said. “But the shift towards local equities reflects the view that Australia will probably be less affected than many global markets by the sub-prime fall-out.”