Fund Managers Still Prefer Defensive Assets
- Russell Investments releases September quarter fund manager survey
- Survey shows fund mangers continue to prefer defensive assets
- Australian equities seen as undervalued
- Interest cuts seen as most likely catalyst for domestic non-mining growth
By Chris Shaw
In the September quarter investors have had to deal with continued equity market weakness and heightened market volatility, reflecting escalating European sovereign debt concerns and doubts about the sustainability of a US economic recovery.
The latest Russell Investment Management survey of Australian investment managers and their views about the market has been conducted with this as a backdrop, the result being some changes in views from the June quarter.
A total of 31% of managers are now bearish on international shares, Greg Liddell, Russell managing director, consulting and advisory services, noting this is ten times the number of managers that were bearish on the asset class at the end of the March quarter.
A majority of fund mangers, 77%, see the Australian equity market as undervalued, the highest number of managers with such a view since Russell began its surveys in 2005. In contrast, 6% of managers see Australian stocks as overvalued at present. The positive views reflect an assessment the Australian economy is relatively well placed compared to developed counterparts.
What didn't change was the number of managers largely maintaining a preference for defensive assets, as evidenced by a further rise of 10% in bullish sentiment with respect to Australian bonds. At the same time bearish sentiment among managers towards growth assets such as Australian and international shares also increased, by 6% and 10% respectively.
The more defensive nature of Australian REIT shares meant managers turned less bearish on the sector in the September quarter. Overall, Liddell, notes managers remain more bullish on domestic shares at 66% than on international shares at 57%.