Canadian Investment Managers Remain Optimistic Toward Equities

    Latest Russell Survey Indicates Managers Particularly Bullish on
    Information Technology and Consumer Staples

    TORONTO, Sept. 25 /CNW/ - Despite the volatility in the market of late,
many investment managers are bullish on Canadian, U.S. and overseas equities,
according to the latest Russell Investment Manager Outlook, a quarterly poll
of Canadian investment managers conducted by Russell Investments Canada from
August 28 to September 4, 2007.
    Bullishness towards Canadian equities has remained fairly steady at 42%,
yet various sectors appear to be falling in and out of favour. For example,
bullishness towards traditionally "recession proof" Consumer Staples rose from
29% to 59%, and bullishness towards Information Technology leapt from 39% to
72%. Meanwhile, sentiment has slipped for Consumer Discretionary, Energy and
Financial Services stocks.
    U.S. equities and emerging equities registered solid up-ticks in
bullishness, with both markets now at 52 percent. EAFE equities continue to be
the most consistently exciting asset class in the world with 67 percent of
Canadian investment managers expressing bullish sentiment.
    "Virtually unchanged since our last quarterly report, the majority of
Canadian investment managers surveyed are looking beyond Canadian borders and
are bullish on EAFE equities," said Tim Hicks, Chief Investment Officer,
Russell Investments Canada. "But, perhaps the most intriguing result of this
quarter's survey is a sharp increase in the number of respondents who rate
Canadian equities as undervalued. After several quarters in single digits,
over 24 percent of investment managers now say Canadian stocks are a relative
bargain. But a more neutral interest rate policy maybe contributing to this
shift in outlook."
    "Meanwhile, though over the last few days the dollar has certainly been
the story, we found when managers were surveyed, they indicated that its
dramatic run-up may soon be exhausted," said Hicks. "Bearishness towards our
dollar has increased considerably from 28 percent to 41 percent with
bullishness slipping from 50 percent to 44 percent."
    Added Hicks, "In our previous Spring Q2 survey, bond market sentiment had
turned sharply negative, with the number of bearish managers soaring from 38
percent to 77 percent. Bears now account for only 42 percent of managers and
bullishness towards Canadian bonds has more than doubled to 15 percent." "In
this years' first two quarters, managers were braced for rate increases from
the Bank of Canada, but are now seeing rates hold steady," said Hicks, "so few
are expecting another hike in the near-term. This may be contributing to the
more modest outlook on the Loonie and reduced pessimism about Canadian bonds."

    Additional key findings include;

    Canadian Equity Market:

    U.S. Sub-Prime Mortgage Issues Regarding Canadian Equities
    When Canadian investment managers were asked how will the U.S. sub-prime
mortgage issues impact the Canadian equity market, the majority of managers,
over 85 percent, predicted a small or medium impact.

    Sector Expectations:

    When the managers were asked what their expectations for the performance
of certain sectors are over the next 12 months, the key findings were;

    -   Bearishness shot up from over 29 percent to 41 percent in the
        Financial Services sector which is most likely an extension of the
        risk aversion stemming from the U.S. sub-prime lending woes.

    -   Bullishness in Information Technology surged from 39 percent to 72
        percent. Factors such as stronger profitability, great stories like
        Research in Motion and Apple, and shake-ups in other areas of the
        market have led more investment managers to take a look at IT again.

    -   Bullishness slipped from 10 percent to 45 percent in Energy seemingly
        falling in line with the sector's performance

    -   A big up-tick in bullishness towards traditionally `recession proof'
        Consumer Staples from 29 percent to 59 percent; and a noticeable
        decline in bullishness towards Consumer Discretionary from 36 percent
        to 24 per cent. While the consensus is that Canada will not face a
        recession in the near-term, concerns about spillover from the U.S.
        could be influencing a more defensive posture among Canadian
        investment managers.

    About Russell Investment Manager Outlook

    Prior to the end of each quarter, Russell Investments Group polls a
sample of investment managers to collect their top-line opinions about the
direction of the markets, sectors and asset classes to watch, and trends on
the horizon that could impact investment strategy. In addition to the
quantitative results, the Investment Manager Outlook provides qualitative
analysis and commentary from one of Russell's senior investment strategists.
Detailed results and analysis from the Russell Investment Manager Outlook are
available on Russell conducted the current Russell Investment
Manager Outlook from August 28 to September 4, 2007. The manager research that
Russell conducts for investment purposes is done entirely independent of
Russell Investment Manager Outlook, and responses to the survey are on a
purely voluntary basis. Twenty investment management firms and thirty-three
(33) managers responded.

    About Russell

    Russell Investments Group is a global leader in multi-manager investing
and one of the world leaders in investment consulting. Russell advises
institutional clients with total assets of over C$2.0 trillion and manages
more than C$233 billion in its investment management business, which employs
Russell's MULTI ASSET MULTI STYLE MULTI MANAGER(R) investment process.
    Russell Investments Group supports its global operations by monitoring
more than 4,000 manager firms and their 8,600 products. The company serves
institutional and individual investors with a full range of investment
services, including investment consulting, investment funds which include
private equity and hedge funds, transition management, commission recapture
and stock indexes. Founded in 1936, Russell has its headquarters in Tacoma,
Washington, USA and has principal offices in Toronto, New York, London, Paris,
Sydney, Singapore, Auckland, and Tokyo. Russell Investments Canada Limited is
a wholly-owned subsidiary of Frank Russell Company. For more information,
please go to

    Russell Investment Group is a registered trade name of Frank Russell
Company, a Washington, USA Corporation. It operates in Canada through its
subsidiary Frank Russell Canada Limited. Frank Russell Company is a subsidiary
of The Northwestern Mutual Life Insurance Company. Commissions, trailing
commissions, management fees and expenses all may be associated with mutual
fund investments. Please read the prospectus before investing. Mutual funds
are not guaranteed, their values change frequently, and past performance may
not be repeated.
    Date of First Publication: September 25, 2007

For further information:

For further information: Thien Huynh, (416) 640-2529; Katita Stark,
(416) 929-9100

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