Fundies rush back into equities

Penny Pryor

If the professionals are right, it could be time to get back into the market.

The latest survey of 40 Australian fund managers by Russell Investments has found a lot more are bullish on equities – Australian and international – than they were just three months ago.

Upbeat trend

In the first quarter of this year, the survey found that the percentage of managers bullish on Australian equities rose from 61 per cent in the fourth quarter of 2011 to 68 per cent in the first quarter of this year (bearish managers fell from 27 per cent to 14 per cent).

Waiting for the right moment ... there is a lot of cash sitting on the sidelines, particularly from retail investors.Photo: Louie Douvis

The trend was similar for Australian small-cap shares – bullish rose to 54 per cent from 43 per cent as bearish fell from 40 per cent to 16 per cent.

“We’re not really surprised. I think the general view was that there was some risk aversion because of the continuing problems in Europe and, once that was resolved, that risk aversion came off,” the managing director of consulting and advisory services at Russell Investments, Greg Liddell said.

Property trust popularity

Australian Real Estate Investment Trusts (A-REITs) are also coming back into favour. Managers’ confidence there rose from 27 per cent to 42 per cent as bearish managers dropped from 32 per cent to 17 per cent.

“A-REITS have been a very unloved asset class for a very long period of time … and now coming back into favour,” Liddell said.

Many A-REITs have restructured and got rid of the huge amounts of debt that troubled them during the GFC.

You may be interested in reading this article, which explains all about A-REITs: How to invest in listed property

Forward planning

We all know there is a lot of cash sitting on the sidelines, particularly from retail investors, who are too scared to do anything after the great burn of the GFC and prefer the safety of term deposits.

With interest rates coming down it might be time to start looking around at a few opportunities in equity and A-REIT markets. But don’t throw everything back in there. If we’ve learnt anything from the crisis, hopefully it’s the importance of diversification.

You may also be interested in reading this: How to re-enter the stockmarket

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