By Eva Brocklehurst

According to the latest Russell Investments quarterly survey of Australian investment managers, we should expect a sustainable turnaround in the Australian share market within 12 months. From a sample set of 40 fund managers, Russell found 77% expect the local market to turn around by end-2013 and 63% expect this occur by end-FY13. The survey was conducted last month and we note that the ASX 200 has now broken up through stiff one-year resistance in a steady rally which began in June. The emphasis here is thus on the word "sustainable".

The most important contribution to a sustainable turnaround is considered to be a resolution of Europe's debt crisis. This is followed closely by stronger growth in China - and a lower Australian dollar. The bears were herding towards the telco and materials sectors - and the Australian dollar. The number of managers bearish on the Australian dollar reached an historical high of 74%, for a survey which has been going for seven years.

By contrast sentiment on Australian bonds was bearish after yields on long-dated government debt fell to historically low levels. Australian real estate investment trusts lost out in the popularity stakes, as did cash. However, the REITs made very strong gains over the past year which probably raised some doubts about the sector's ongoing value and falling interest rates would certainly have detracted from cash. The bears were seen heading towards the telecommunications sector which was at its poorest sentiment-wise in 18 months.

The survey found