Despite a cautious outlook on the global recovery over the short term, Australian funds managers appear to have bullish sentiment when it comes to international and Australian shares.
That's according to the latest survey from Russell Investments, which captured the views of around 30 Australian fund managers on market sentiment and upcoming trends affecting investment strategy.
The survey found that optimism for both international and Australian shares was on the rise, although Australian managers were still preferring global (71 per cent) over local (65 per cent).
The majority of managers (71 per cent) now consider Australian shares to be fairly valued, the survey stated.
"With improving US economic data and signs of growth picking up in the Euro-zone, it appears managers believe the worst is over and share markets can move higher in the medium term," Russell director of client investment strategies Scott Fletcher said.
The lower Australian dollar has also been a positive for the economy as trade picks up, Russell stated.
The survey revealed that 74 per cent of managers are positive about the outcome of the Federal Election and that the Government would bring more consistent policies, specifically the removal of mining and carbon taxes.
As such, the survey found that the biggest shifts in bullish sentiment were in energy, up from 42 per cent in the last survey to 77 per cent, and materials, up from 39 per cent to 58 per cent.
Despite this, Fletcher said Russell remains cautiously optimistic on the domestic share market in the near term, referring to events such as the US government shutdown and the potential for bond yields to rise.