US equities still attractive, unlike European assets

Over half of the world’s leading fund management houses are holding an underweight view towards European equities in the second quarter of 2010, while North American assets remain attractive, according to the quarterly HSBC Fund Managers Survey.

Head of global investments for HSBC in Australia, Charles Genocchio, said the findings came as the current European debt crisis continued to impact the global economic recovery.

“However, fund managers do not view cash as a strong alternative and will continue to invest selectively in more risky assets,” said Genocchio.

The HSBC survey, which analysed 13 of the world’s leading fund managers, also finds that three in four respondents are bullish on emerging markets equities in the second quarter of 2010, compared to 60 per cent in the previous quarter.

Across all asset classes, global bonds posted the biggest inflows of US$20.5 billion, rising 22.5 per cent in the first quarter of 2010, compared to the previous quarter’s 8 per cent growth.

“Investors have become more attuned to global economic developments and are reacting quickly to the volatility caused by fast-changing events by rebalancing their portfolios. In general, investors remain cautious, favouring bonds that provide diversified exposure and equities in regions such as the US and emerging markets where economic recovery is more apparent and sustainable,” said Genocchio.

At the end of the first quarter of 2010, fund houses covered in the survey reported aggregated funds under management (FUM) of US$3.82 trillion, representing about 16.5 per cent of the estimated total global FUM. In the same period, FUM increased by US$35 billion, up 0.93 per cent from the last quarter of 2009.