While internationally focused investors may still be hot on Asian and emerging markets, a growing group of fund managers say investors should not overlook developed markets altogether.
This comes amid fears expressed by some market watchers that emerging markets are seeing more “stretched” valuations, which makes them vulnerable to a sell-off, should worldwide growth disappoint investors.
The majority of fund managers are more bullish on the economic and earnings outlook in 2011 than in 2010, said in a report released by OCBC Bank’s wealth management arm, which surveyed 19 local and international fund management firms.
Their optimism on emerging and Asian markets was particularly evident, said the survey.
However, the report also identified some fund managers who are urging investors not to disregard opportunities in developed markets.
One of these fund managers is Deutsche Asset Management, which sees US equities performing well.
“Most American companies are truly global with a significant amount of revenue and profit accruing from the emerging economies. Also the valuations, in many instances, are cheaper than their emerging market peers,” said William Barbour, Investment Specialist at Deutsche Asset Management.
According to a recent quarterly Bloomberg Global Poll of 1,000 investors, analysts and traders, the United States is one of the best places for investment.
Investors also favour Europe, with Henderson Global Investors urging investors to look at high-yielding quality stocks with sound business models in the region.
“Most developed markets are attractive, but Britain and core Europe look interesting because performance has been held back by currency weakness and concerns about servicing some of the large budget deficits being run by several peripheral European countries,“ said Bill McQuaker, Director of Multi-Manager Funds at Henderson, in an interview with The Sunday Times.