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Asset allocators go overweight in equities

This months Merrill Lynch Global Fund Manager Survey shows that asset allocators have moved overweight in equities for the first time in more than a year.

The impressive performance of equity markets over the past three months has resulted in a net 9% overweight in the asset class, while bonds allocations were reduced to 15% underweight, and cash holdings also fell.

Much of this positive sentiment has focused on emerging markets, and particularly Asian markets. A net 62% of respondents said they believe the Chinese economy will improve over the next 12 months.

Partly because of the demand for natural resources that this would entail, the outlook for commodities has also improved, with the overweight rising steeply from a net 7% in May to 19% this month. Russia was a major beneficiary of the commodity play, with its weighting up significantly from last month compared with its emerging market peers.

The Merrill Lynch Global Survey of Fund Managers was carried out between June 5-11 with 226 investors surveyed responsible for a total of $620 billion (382 billion) of assets under management.

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England vs Australia: pensions

Well, the cricket season is here, and England and Australia are stepping up to the wicket. Although we compete with each other in the sporting world, when it comes to pensions, Australia’s pension programme is held up as a model for our auto-enrolment initiative. Auto-enrolment was introduced because people weren’t saving enough into their pensions, and it is still early days but signs are positive. However, in Australia, saving into a pension is compulsory, and in fact employers are the ones who have to pay in. Employees in Australia can make additional contributions into their pensions, but they don’t have to. Should the onus be on the employer or employee to save? Well in the UK we think it’s both, but to get ‘adequate’ savings for retirement it’s the employee who has to pay more in.

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