Managers expected the S&P 500 to rise by nearly 4%, the Dow Jones Industrial Average by close to 3% and the Nasdaq Composite by just over 1%.
On a relative basis managers preferred the investment opportunities in Asia. Some 42% said Asia excluding Japan would be the best performing market over the next year while 21% favoured Japan. Compared with November’s survey this was a dip in sentiment for Asia which had been at 56% but an impr
ovement for Japan which rose from 6%.
Almost all managers said the dollar would perform the worst of all the main currencies in 2004. The euro was expected to continue its rise with 69% saying it would be the best performer.
Larger firms looked increasingly likely to outperform their medium and small counterparts. Some 42% said large cap would be the top performing investment style over the next year, up from 31% in November.
Growth companies were largely expected to outperform value firms. Some 47% of managers favoured growth while only 18% said value would do better.
Global stockmarkets
In line with their year-end stockmarket index predictions none of the managers surveyed said global stockmarkets would fall in 2004. Over half said they would rise between 5-10% while 31% said 10% or more.
Managers said the biggest gains would be in the financial services and industrial materials sectors. The utilities sector was expected to offer the worst performance over the next year by far with 46% ranking it bottom.
Some 93% intended to launch new funds in 2004 with equity [share] funds dominating the new products. Balanced funds – those that contain a mix of shares and bonds – were the runner-up.
In an open question the survey asked managers what events could shock stockmarkets in 2004. Responses ranged from terrorist attacks to a dramatic fall in the dollar to a waning Chinese economy.
The theme of the month focused on the level of disclosure among fund groups. Managers said the areas needing the most improvement were information about the riskiness of investments and more details on the strategy and style of a fund.
The degree of alignment of fund manager and investor interests is relatively opaque. Only 13% provided information on how much fund managers have invested in their own funds. Only 6% who do not already provide this data planned to do so in 2004.
Websites and monthly newsletters were the key formats through which groups communicated with investors.
Morningstar’s European offices conducted the survey from December 9th-16th. Some 45 fund groups from 10 countries participated. On average they each managed €62 billion (£43 billion) and offered 90 retail funds.
