Money managers over the next five years are bullish when it comes to stocks but bearish with government bonds, according to a survey by Towers Watson.
Among the 141 primarily institutional managers surveyed, 85% are bullish on emerging markets equity, up from 87% in a 2010 survey, while 79% are bullish on public equities generally, vs. 74% last year.
With nominal government bonds, 79% are bearish, compared to 77% in 2010, and 41% are bearish on investment-grade bonds, vs. 26% in 2010.
All expectations are for the next five years.
As it was in 2010, about half of managers were bullish on private equity and real estate in 2011. Similarly, 39% were bullish on hedge funds, the same as in 2010. However, there was a major drop in confidence for commodities, as just 35% were bullish in 2011, down from 71% the previous year.
Managers are expecting annual 2011 U.S. equity returns of 10%, the same return they expected for 2010; expected returns for the U.K. and eurozone were 10% and 7%, respectively, vs. 8.5% and 9% in 2010. Chinese equities were expected to rise 10.5% in 2011, down from 14.5% in 2010.
“There is sustained optimism from last year reflected in, among other things, an increase in the expected propensity of investors to take risk in 2011 and managers' commensurate bullishness about risky assets,” Carl Hess, global head of investment at Towers Watson, said in a news release.
“A further indication of optimism is the view that all economies are expected to have moderate growth in 2011 as well as during the next 10 years, supported by loose central bank monetary policies,” Mr. Hess said.