In keeping with those forecasts, "oil companies" was the most favored natural-resources sector among survey respondents, with 41% reporting an overweight position in the area and only 16% reporting an underweight. Fund companies surveyed expect high natural-resource prices to take a toll on economic growth, though not an extreme one: 68% of survey respondents said they think high prices will cause economic growth to slow to some extent, but only 6% said they expected economic growth to slow a lot.
Despite their relatively strong outlook f
or oil prices, only 15% of respondents are anticipating launching new natural resources funds. That's an improvement from the tech boom, when many fund shops rushed to launch technology and Internet funds that ultimately ended up badly burning investors in the ensuing bear market.
Investment Style: Large Growth to Roll?The vast majority of fund groups responding to the survey said that they expected growth stocks to outperform value stocks in the next 12 months. There was also a clear preference for larger companies: 74% of respondents said that large-caps would outperform small-caps over the next year.
Morningstar's Take
While we cannot predict the direction of commodity prices, investors have already made considerable sums of money in the energy sector in recent years and the area is fraught with uncertainty. As such, investors may decide to take some profits out of energy and redeploy them into areas that have underperformed. One such area, as survey respondents note, is funds that emphasize larger-cap, growth-oriented companies. Large-growth shares have generally fared poorly for the past few years, and the FTSE 100 P/E ratio was recently at a slight discount to the FTSE 250 P/E ratio.
