Frankfurt am Main, December 14 2015
3rd survey among independent investment experts
Forecast – prices on leading stock exchanges will rise, no turnaround in interest rates in the euro zone
China greatest risk for the global economy next year
The investment professionals therefore recommend private investors to give equities from industrialized nations the greatest exposure in their portfolios. These are the key conclusions of the annual survey held among asset managers by Universal-Investment. For its third study in November 2015, the Frankfurt-based investment management company questionned nearly 20 independent asset managers successfully managing funds on the retail fund platform of Universal-Investment with a total volume of several billion euros.
For three of the most important equity indices, the asset managers forecast that share prices will rise in 2016, although their expectations in respect of the increases are no longer quite as high as in the previous year's survey. Specifically, the experts expect the DAX to gain around eight percent next year (based on the closing rate of 27.11.2015) to an average level of 12,224 points. For the European leading index EuroStoxx 50, the asset managers also expect a gain of just over eight percent to 3,778 points by year-end 2016. For the US company index S&P 500, slightly lower growth is expected in the same period of around five percent to 2,201 points.
After commodity prices had fallen on a broad scale this year to the disappointment of most commodity investors, the investment specialists are now more upbeat again about oil and precious metal prices – according to their estimates, the gold price should have gained nearly twelve percent on the current price by year-end 2016 to pan out at an average 1,181 US dollar per ounce. For silver, the asset managers forecast an increase of 15 percent to 16.24 US dollar per ounce. The price of a barrel of WTI crude oil should also rise by 21 percent to 54.38 US dollar by the end of 2016.
Two thirds believe that the ECB's QE programme is "laying the foundation for the next financial crisis"
The ongoing pressure on the euro zone is also reflected in the asset managers' expectations regarding interest rate developments. While the majority assumes that the European Central Bank (ECB) will leave key interest rates at their current low level of 0.05 percent over the course of the year, several of the investment specialists expressed their belief for the first time that interest rates could slip into the negative zone. For the USA the majority of those surveyed now expect interest rates to shift direction and US key interest rates to be raised within the space of a year from 0.25 to 0.5 percent.
The majority of the asset managers are deeply critical about the ECB's recent decision to expand its asset purchasing program (QE) by several billion euros each month - more than two thirds of those surveyed (69 percent) fear that "the ECB's policy of buying up sovereign bonds, ABS and other instruments will lay the foundation for the next financial crisis". On the other hand, the remaining third (31 percent) share the view that "the expansion of money supply and the QE programme was and still is the only possibility of stabilizing financial markets."
After France in the previous year, China now poses the greatest risk to the world economy
Regarding the economic scenarios for the next twelve months, somewhat more than half of those surveyed expect the global economy to stagnate (2015: 63 percent). 38 percent of the asset managers expect inflation (previous year: 25 percent). The asset managers were clear about the countries likely to pose the greatest risk to investors in the foreseeable future. The focus of their worries has shifted to Asia - in the previous year, the main source of concern was France but this time nearly half (47 percent) claimed that they now view China as the problem child. Those participating in the survey remain optimistic about economic expansion in Germany and expect growth of around 1.4 percent in 2016.
Investment recommendations - invest more in equities from industrialized nations
Based on this global assessment, Universal-Investment asked the asset managers to make two recommendations – to which asset classes should private investors show preference in coming months and on which investment regions should they focus? As in the previous year's survey, the asset managers again recommended investing more than half (53 percent) of their investment funds in equities, giving priority to shares in companies from the industrialized nations (46 percent) over companies from the emerging markets (seven percent). The share of bonds should only amount to around one quarter (26 percent) compared with 30 percent in the previous year. In the regional breakdown, the asset managers recommend allocating 19 percent into bonds from industrialized and seven percent into bonds from emerging markets.
Broken down over the regions and countries in which investors should preferably invest next year, the asset managers' strong drive towards economically-developed nations becomes apparent once again as well as their restraint towards emerging markets - the specialists recommend that private investors invest nearly nine tenths (87 percent) of their available funds in securities from Europe without Germany (31 percent), the USA and Germany (in each case 25 percent) and Japan (six percent), i.e. nine percentage points more than in 2015 (78 percent). In return, the recommendations for investments in emerging markets without China were lowered (from 14 percent 2015 to six percent in 2016) as well as for China itself (from six to five percent) and the other countries (from six to three percent).
Ongoing trend towards specialized theme strategies and absolute return concepts
According to Katja Müller, divisional head of Sales & Relationship Management at Universal-Investment, "demand for funds of independent asset managers is steadily rising on account of their specialist expertise". The robust demand is also reflected in the growth of the retail fund platform of Universal-Investment - more than 550 private label funds are now managed there, with a volume of a good 25 billion euros. "In the last twelve months, we've managed to further expand our market leadership for private label funds and our status as central platform for independent asset manager", Müller continues. As balanced funds become increasingly sophisticated, Müller also expects the trend towards specialized theme strategie and absolute return concepts to continue.
For more survey results, interactive graphs and individual recommendations of selected asset managers, see https://infogr.am/vermogensverwalterumfrage_2016