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January 13, 2006
Investment manager's global predictions for 2006
Investment managers expect 2006 equity performance in the major markets to lag behind the double-digit returns of 2005, according to a global Mercer survey.
Managers also anticipate a particularly sharp decline in the outlook for emerging markets, according to Mercer Investment Consulting’s annual Fearless Forecast survey.
Investment managers from 157 firms worldwide, which have more than USD 20 trillion in assets under management, participated in this year’s Fearless Forecast, an established, highly-regarded survey of economic and capital market expectations for the year ahead. The investment managers, based in Europe, North America and Asia Pacific, were asked for their global and regional views on the economy and capital markets for 2006.
Global equity markets will achieve a median 7.6 per cent* return in 2006, the global investment managers in the Mercer survey predicted, which compares to a 9.5 per cent return for the MSCI World IndexSM in 2005 and annualised historical returns for the past three years of 19.3 per cent.
Global investment managers in Mercer’s survey expect the MSCI UK IndexSM to achieve a median return of 7.7 per cent in 2006, approximating the 7.4 per cent return in 2005.
UK investment managers surveyed forecast real GDP growth for the UK of 2.1 per cent, trailing projected global GDP growth of 3.1 per cent.
Global investment managers surveyed forecast a median return of 8.0 per cent in 2006 for the MSCI EAFE. (Europe/Australasia/Far East) Index, which compares with a 13.5 per cent return posted in 2005. However, there was wide variation in the predictions, from 3.0 per cent to 13.2 per cent (at the fifth and 95th percentiles). Consistent with this wide range, investment managers in all regions surveyed expect more volatility in the equity markets in 2006 compared to 2005, particularly outside the US.
US equity performance is expected to improve in 2006, but only to move more closely in line with the performance of the developed markets of Europe, Australasia and the Far East. Survey respondents managing global assets expect the MSCI USA IndexSM to return 7.5 per cent in 2006, an improvement from the 5.1 per cent return in 2005.
Turning to developing markets, the global investment managers in Mercer s survey forecast a median return of 9.0 per cent in the MSCI Emerging Markets IndexSM in the coming year, sharply below the dramatic 34.0 per cent return achieved in 2005.
Bond market yields are expected to rise, delivering a median 4.0 per cent return for the broad global bond index. However, the majority of investment managers in the survey foresee a decline in the attractiveness of corporate bonds in 2006. The best performing bond markets in 2006 are expected to be in the UK, Australia, the US and New Zealand.
-HedgeWeek.com-
Posted by su at January 13, 2006 10:14 AM