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Investor sentiment index shows growing confidence and continuing asset rotation

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Rapidly rising confidence in the global economy is driving a further rotation from bonds into equities, according to the latest edition of the Invesco European Investors Sentiment Index.

The index, compiled for Invesco by Citywire through a survey of some 100 fund selectors across Europe, marks its first anniversary this month.
 
In the third edition of the index, which is compiled every six months, 52 per cent of respondents say they are positive or very positive about the global economy. A year ago, that figure was just 17 per cent and stood at just 32 per cent last November.
 
Even deep-seated economic problems with Europe and the Eurozone appear to worry investors less.  Today, the state of the continent’s economic health now influences the current investment decisions of just 36 per cent of investors, down from 55 per cent in June 2012.
 
This increased confidence is continuing to change the portfolios of the fund selectors. More selectors (44 per cent) plan to increase their exposure to European equities over the next 12 months than to any other asset class, with absolute return funds (43 per cent), US equities (39 per cent) and global emerging market equities (35 per cent) next in line.
 
By contrast, the list of sectors to which selectors will cut exposure is led by different bonds classes with Eurozone government issues (26 per cent of selectors) followed by European corporates (22 per cent) and US Treasuries (21 per cent).
 
“While the global economy still offers many interesting investment options, Europe must not relent in its efforts to ensure that trust is restored across global investors,” says Sergio Trezzi, managing director, head of retail sales and client service, Invesco Continental Europe. “Personally, I am optimistic that investors’ interest in Europe will be revitalised.”

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