Fall in Aussie fund manager market sentiment – Russell

The Russell Investment Manager Outlook survey has found 49 per cent of Australian fund managers believe the share market is fairly valued, a fall from 60 per cent in the December 06 quarter, while those who believe it is overvalued rose from 37 per cent to 49 per cent.

The RIMO surveys Australian fund managers on a quarterly basis about their sentiment on a range of investments including local and international equities, listed property trusts, bonds and cash.

Chief investment officer for the Asia Pacific, Peter Gunning, said the March quarter RIMO found Aussie managers are most concerned about weaker earnings growth as the biggest risk to ongoing performance.

“They are also concerned about declining commodity prices (51 per cent) and interest rate increases (45 per cent), weaker house prices (nominated by only 6 per cent of managers) and increasing energy costs (8 per cent).

Gunning added that the survey found managers continued to prefer international shares despite the ongoing out-performance of the local market — a preference he said that had persisted since the launch of the Russell IMO almost two years ago.

“Returns on Australian shares have exceeded those on global markets (in A$ terms) by 18 percentage points over the two years to the end of 2006,” he said.

“This performance gap has persisted so far in 2007, with the Australian market returning 0.6 per cent up to March 5, while global shares (MSCI All Country World Index ex Australia) have lost 0.8 per cent.”