10 October 2009
 Our
latest survey of global equity funds shows
that portfolio managers are continuing to
favour their home markets, even though domestic
economic conditions are frequently very poor.
The U.S., U.K. and Continental Europe have
been among the hardest-hit regions in the
global financial crisis, yet most global share
funds have above-average allocations to these
markets.
Perhaps the biggest
surprise is the confident view that managers
have about the UK. The average manager has
nearly 12% of their money in the U.K. which
is well above its benchmark weight (see table
below). Although the U.K.'s share of the world
market has dropped by nearly 13% over the
past three years from just under 10% to its
current level of 8.5%, fund allocations have
continued to grow.
The world benchmark
weighting for the U.S. stock market is 40.7%
but the participants in our survey had an
average weighting of 42.7%. However this number
is a bit misleading because there is a wide
dispersion around the mean. American and British
fund managers are generally more pessimistic
about the U.S. market than European and Asian
investors who have an average asset allocation
of close to 46%.
Most fund managers are
neutral on Japan but are worried about the
rest of Asia. The demand for Asian stocks
has climbed over the past six months but is
still well below its 13.2% share of the world
market.
|
Where global
fund managers have their money
|
|
| Country /
Region: |
Actual
|
Benchmark
|
+/-%
|
| United
States |
41.8
|
40.7
|
+1.1
|
| Japan |
8.2
|
8.4
|
-0.2
|
| United
Kingdom |
11.9
|
8.5
|
+3.4
|
| Continental Europe |
25.1
|
21.1
|
+4.0
|
| Asia
(ex Japan) |
7.2
|
13.2
|
-6.0
|
| Other |
5.8
|
8.1
|
-2.3
|
| Total |
100.0
|
100.0
|
|
|
Their caution on Asia
is actually more pronounced than it looks
at first sight because several managers
have been increasing their share investments
in Australia, which is included in the Asia
(ex Japan) category.
Source: Wren Research,
Oct 2009
|
|
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