An “overwhelming” majority of fund mangers expect increased volatility to persist into 2012, according to research by the Association of Investment Companies .
The trade body’s annual fund manager poll shows 96 per cent of respondents anticipate continued volatility in the coming 12 months. However, 71 per cent of fund managers still expect the markets to end 2012 up.
Most confidence is given to emerging markets, with 27 per cent of managers saying they expect these regions to close ahead next year. This is followed by the US, Europe, Asia Pacific ex Japan, Latin America and frontier markets.
Offering reasons for this optimism, 26 per cent cite strong company balance sheets and the same proportion claim equities remain good value. Additionally, 13 per cent think global growth will be better than expected, while 9 per cent place their faith in government interventions in the economy.
However, the eurozone debt crisis is expected to remain the main threat to markets in the coming year, with 62 per cent of managers labelling it the biggest single risk to equities. One-third regard a global recession as the largest threat.
Annabel Brodie-Smith, communications director at the AIC, says: “It’s been a tough year for markets with eurozone debt dominating the year. Fund managers are not surprisingly cautious about next year’s prospects.”