Russell Investment Manager Outlook Highlights
- 82% of investment managers have positive outlook for the S&P/TSX in 2011
- 69% of managers bullish on Emerging Markets
- 60% optimistic about Overseas equities
TORONTO, Dec. 15 /CNW/ - Investors could experience plenty of good cheer during the holidays as 77% of investment managers are bullish on Canadian equities for the fourth quarter of 2010, according to the latest Russell Investment Manager Outlook.
"Canadian equities were the prime benefactor of improving sentiment, with the proportion of bullish investment managers up from 56% to 77%. Bears fell from 31% to just 15%. Although Canada is not immune to economic challenges - especially if the US recovery continues to lag - our nation's strong resource base is clearly a valuable asset as the global economy picks up steam," says Sadiq S. Adatia, Chief Investment Officer of Russell Investments Canada Limited (Russell).
"This is reflected in positive sentiment towards the energy sector, which moved from 54% bullish to 80% bullish this quarter on the back of a rising oil price. In a recovery, increasing infrastructure development typically translates into higher energy needs, which places the Canadian oil patch in an enviable position."
Managers optimistic towards foreign equity markets
According to the survey, bullish sentiment towards equities surged in the fourth quarter of 2010. Not only are managers increasingly bullish across domestic, US, international and emerging market equities, but bears have dropped off markedly.
The outlook for international equities rebounded from 44% of managers bullish last quarter to 60% this quarter.
"The Greek debt crisis has faded from headlines, and investment managers may be feeling that no news is good news. However, we don't believe the full dimensions of that crisis have yet been uncovered, and expect that European markets may experience further setbacks, such as the recent negative news on Irish banks," says Adatia.
US market sentiment rose a few points to 54% bullish, and bearish managers slid from 25% to 15%.
"While there is no great expectation of further downside in US equities, especially given the Fed's recent willingness to prop up the market with quantitative easing, the upside potential is not seen to be as compelling as that offered by stronger markets, such as Canada and the emerging world," says Adatia.
Bullish sentiment rose from 47% to 69% for emerging markets, with only eight percent of managers bearish.
"Emerging markets stand to benefit from the rehabilitation of the western consumer, but are also making strides in developing domestic demand—a two-pronged strategy that should lead to strong economic performance in the coming years," says Adatia.
82% of managers have positive outlook for S&P/TSX Composite Index in 2011
Assessing the Canadian market as a whole, 58% of investment managers say it is fairly valued, about a quarter say it is undervalued, and only 16% believe it is overvalued. When it comes to predicting the performance of the S&P/TSX during 2011, overall 82% expect positive returns, and nearly one-in-three believe those returns will be 10% or higher.
"Indeed, in a market that offers high and increasing dividend yields, double-digit returns do not seem out of reach," says Adatia.
"We believe the secret to investment success during this period of economic recovery is to leverage the skill and experience of active portfolio managers. There is currently a 76% gap between the most and least bullish sectors of the Canadian market, and we believe professional portfolio management is the best way to navigate through this divide and achieve solid returns."
For access to the full Investment Manager Outlook, please visit www.russell.com/ca or call Thien Huynh at 416-640-2529.
About the Russell Investment Manager Outlook
As creators of the Russell indexes and one of the few firms that researches thousands of investment manager products worldwide, Russell Investments has extraordinary access to senior-level Canadian investment decision-makers. Prior to the end of each quarter, Russell surveys a sample of those investment managers to collect their top-line opinions about the direction of the markets, sectors/styles to watch, and trends on the horizon that could impact investment strategy.
The result of this survey is the Russell Investment Manager Outlook. Three of the four questions posed to investment managers are repeated each quarter, so that results can be measured over time. The poll also includes one topical question that changes each quarter. In addition to providing quantitative results, Russell reviews the data collected each quarter, and provides a qualitative analysis from a senior investment strategist.
The Russell Investment Manager Outlook is completed and distributed at the end of each quarter. This report includes responses from investment managers with a variety of investment focuses. The manager research that Russell conducts for investment purposes is done entirely independent of the Russell Investment Manager Outlook, and responses to the survey are on a purely voluntary basis.
About Russell Investments
Founded in 1936, Russell Investments is a global financial services firm that serves institutional investors, financial advisers and individuals in more than 40 countries. The firm has C$149 billion in assets under management (as of 06/30/10) in its mutual funds, retirement products, and institutional funds.
Russell Canada was recently named the #1 fastest growing money manager in Benefits Canada's 2010 Top 40 Money Managers Report. For more information about how Russell helps to improve financial security for people, visit us at www.russell.com/ca.
For further information: For further information:
Thien Huynh 416-640-2529