Managers said a number of major indices would rise in 2006 including the FTSE 100 index of the largest companies in the UK which is predicted to hit 5,870. The FTSE 100 closed at 5,623 on December 28th.
This month the survey took a closer look at the information disclosed to fund investors by fund groups. Over a third of fund groups said that information on the risks of a fund is the type of data that can be most improved. This is pertinent in light of the fact that over half of the groups in the survey said that investors have unrealistic expectations regarding the performance of their funds and the associated risks. Improvements in strategy and investment style information were also mentioned by 26% of fund groups as necessary.
Only a handful of fund groups provide data on how much their fund managers have invested in their own funds. This year 84% said they do not give out such information, up from 76% when Morningstar asked this question a year ago.
Fund groups primarily communicate with their investors through their websites with 43% citing it as the key media for informing investors. Monthly letters were the most popular choice for a quarter of fund groups.
Country preferences
In line with managers’ predictions about the performance of the Nikkei 225 index Japan was expected to be the best performing market over the next year. Japan garnered 43% of the vote while Europe excluding the UK came in a distant second with 18%.
Some 43% of fund groups said America would be the worst performing region on a relative basis. The UK followed with 24%.
These opinions were reflected in the currency preferences. Over half of the managers surveyed said the yen would be the strongest currency on a relative basis in 2006. Some 54% said the dollar would be the worst performer while a fifth said the euro would disappoint.
In terms of stockmarket sector performance over the next 12 months financial services and healthcare were the favourites with 22% and 19% respectively. The utilities sector was predicted to offer the worst relative performance, followed by the consumer goods sector.
Morningstar’s European offices conducted this survey from December 12th-19th. In total 42 fund management groups from 13 countries participated. On average they each managed €49 billion (£34 billion) and offered 100 retail funds.
