Investment Outlook for 2011

The following statements are a selection of fund manager's investment outlooks across investment sectors and offer an insight into where we should consider investing in 2011.

Emerging markets:
Devan Kaloo: Head of emerging markets, Aberdeen Asset Management

Robust economic growth in the developing world and continued monetary easing in advanced economies are expected to continue supporting emerging equities. To prevent the flood of foreign capital inflows from exacerbating inflation and pushing up exchange rates further, more governments are likely to implement capital controls. But it is unclear if these will be effective. We remain cautious in our outlook.

Global:
James Thomson: Fund manager, Rathbone Global Opportunities.

Market activity is likely to remain volatile and it will become harder to outperform consistently. Companies that are not closely tied to the performance of developed economies, but have products and services in high demand, should outperform in 2011.

Japan:
Ian Heslop: Fund manager, Old Mutual Japanese Select

The Japanese equity market remains cheap and the political pressure on the Bank of Japan to loosen monetary policy bodes well. Continued earnings improvement points to good performance for Japanese equities in 2011.

Europe:
Richard Pease: Fund manager, Henderson European Special Situations.

We enter 2011 with government debt looking poorer value and arguably riskier than some European equities. The turmoil in the sovereign debt markets has held back the advance of European equities, so European equities have the potential to perform surprisingly well in 2011. We enter 2011 with government debt looking poorer value and arguably riskier than some European equities. The turmoil in the sovereign debt markets has held back the advance of European equities, so European equities have the potential to perform surprisingly well in 2011.

Fixed income
Richard Hodges: Fund manager of Legal & General Managed Monthly Income Trust

The only thing you can be certain about for bonds in 2011 is uncertainty. With sovereign credit weakness and consequential concerns about banks spreading further through Europe, and the US employing increasingly desperate measures to stimulate growth, news on the success or failure of policy will involve different segments of the bond market oscillating between euphoria and panic. It will be a year when having breadth of choice for asset selection and being nimble in changing position will be at a premium.

Commodities
Bradley George: Fund manager, Investec Natural Resources

The outlook for 2011 looks promising for certain commodities where there is investment demand and improving fundamental demand. In the precious metals space, demand for gold from different sectors is likely to force a peak that is nearer $1,700/oz in 2011 with $1,100/oz becoming the long-term floor. Crude oil markets have tightened significantly over the past three months and oil prices are likely to average around $100 per barrel on a long-term basis. We also have a bullish view on grain prices over the next six months.

Asia ex-Japan
Allan Liu: Fund manager, Fidelity South East Asia.

South East Asia, with its generally healthy financial systems and solid fundamentals, remains attractive. Domestic demand is robust, supported by increasing affluence, low debt and high savings rates, all of which are likely to support a multi-year growth cycle

UK
Philip Matthews: Fund manager, Jupiter Growth & Income

There are big differences between parts of the market exposed to Western economies and those exposed overtly to emerging markets. Corporate balance sheets are in robust health and we would expect continued corporate activity, especially in the context of subdued global economic growth. We expect equity markets to remain underpinned by their high levels of free cash flow relative to the low levels of return on offer either from government bonds or corporate bonds.

US
Michael Brewis: Fund manager, Baillie Gifford American.

I am optimistic about the outlook for North American equities in 2011. The US economy should continue to recover; the recent upturn in capital spending is an encouraging indicator. Corporate sector profitability and cash generation have been restored, and productivity growth has been excellent, but many companies now need to invest and hire to grow. The housing market is the main negative but should not derail the recovery

SOURCE: Citywire - December 17, 2010.

Economic Review November 2010

The latest edition of our economic review is reading for viewing. To obtain a copy please forward an e-mail to ifa@ferguson-oliver.co.uk and one will be sent on straight away.

This months review covers the following subjects: -

• Crisis in Ireland
• PIGS at risk
• UK Economy
• Markets
• Interest Rates and Inflation
• Business
• China