Investment Managers Bullish About Equities; Bearish on Bonds

Fund managers are bullish about equities and emerging markets in 2011, but hold a bearish view of the government and corporate bond markets, according to a survey conducted by human resources consulting firm Towers Watson.

Money managers predict that returns on global equities in 2011 will be 10 percent, equaling last year's performance, with established western markets continuing to lag behind emerging markets, the research found.

On the other hand, managers have taken a pessimistic view of government bonds in the near-future, since rates are expected to remain low throughout 2011, said Towers Watson, which surveyed 141 investment managers, including institutional investors with $13.5 trillion in assets under management.

The survey said that 79 percent of investment managers are bearish about the prospects for government bonds. Meanwhile 48 percent hold a neutral view of inflation-linked government bonds over the near-term. And 41 percent have taken a neutral position over the prospects of the high-yield bond market.

"This influential group of investment managers indicates that we continue on the path to recovery, but that will be volatile and patchy depending on the market," Carl Hess, Towers Watson's global head of investment said in a statement.

"There is sustained optimism from last year reflected in, among other things, an increase in the propensity of investors to take risk in 2011 and manager's commensurate bullishness about risky assets."

The survey found that 85 percent of investment managers hold a bullish view for emerging markets over the next five years. But most of those surveyed have turned cool towards hedge funds, with only 46 percent taking a bullish stance on the sector, Towers Watson added.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio