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Most fund managers see rising markets in 2009, says AIC

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Just under two thirds of fund managers are optimistic that markets generally will rise in 2009, according to a poll of investment company fund managers by the Association of Investment

Just under two thirds of fund managers are optimistic that markets generally will rise in 2009, according to a poll of investment company fund managers by the Association of Investment Companies.

However, a significant 38 per cent of the managers polled disagreed with this.

There was a diversity of views on where the level of the FTSE 100 would end up in 2009, with most managers (54 per cent) expecting the index to close between 4,500 to 5,500, but 23 per cent expected the index to close below 4,000.

Blue chips were tipped as the sector most likely to outperform for the third year running and the US was tipped to be the best performing region in 2009.

The majority of managers (54 per cent) thought the global recession was the greatest threat to equities, while attractive valuations (44 per cent) were the managers’ greatest cause for optimism.

Nearly half (46 per cent) of managers plan to increase their gearing levels in the next six months, indicating that they intend to take advantage of the markets’ perceived attractive investment opportunities.

Annabel Brodie-Smith, communications director at the Association of Investment Companies, says: ‘After such a tough year for equities, fund managers are clearly divided over the prospects for 2009 with the majority expecting to see equities rising next year, but still over a third think equities will stagnate or fall in 2009. Bravely, the managers tip the US, ‘the phoenix to rise from the ashes’, to be the top performing region next year, whilst blue chips have been tipped as the sector to outperform for the third year running. Not surprisingly the global recession and general lack of liquidity are their greatest concerns for equities.

‘However, nearly half of the investment company managers surveyed are planning to increase their gearing in the next six months – indicating that they believe that they are finding investment opportunities and positioning their portfolios for a market recovery. Whilst it’s interesting to gauge the views of investment professionals, markets are impossible to predict and one year’s best performing sector can sometimes become the following year’s worst performer. So it’s important to take a long-term view, ensure you have a balanced portfolio and not to get carried away by the latest ‘hot’ sector.’

Bruce Stout, manager of Murray International, adds: ‘Companies will be reporting bad news for months to come as the financial crisis hits the real economy. Most stock markets around the world will not start to recover properly until the second half of 2009. However, in the case of the UK it may take longer; being hindered by a huge debt mountain, rising unemployment and weak currency. That said, for investors willing to take the pain of short-term fluctuation, attractive long term investment opportunities are appearing around the world."

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