Macroeconomic issues and market uncertainty continue to be listed as the biggest risk facing equities, with 35% of respondents indicating this as the biggest challenge for 2014. By contrast, last year 61% indicated that market uncertainty was the biggest risk, followed by inflation.
The survey was conducted last month and asked fund managers with around £3trn in assets under management for their views on the markets and likely macroeconomic influences for 2014.
Only a minor 8% believe that flows into equities could decline, while a majority of 62% expects an increase.
eurozone confidence
Around 74% who took the survey indicated that they did not expect eurozone issues to affect markets negatively this year. Last year, only 29% were of this sentiment.
Perhaps not surprisingly, equities were considered the biggest opportunity to tap into economic recovery and strong earnings growth, according to 65% respondents. Growth would be primarily driven by top-line growth, they added.
By contrast, in 2013 fund managers believed the biggest opportunity to be in an increased focus on equity valuations, relative to bonds.
Highest GDP growth was expected in emerging markets, 33% respondents indicated. US achieved 31% of the vote, while Asia accounted for 25%. The UK and eurozone combined accounted for a slim 11% of the vote.
Mid-cap drivers
Something of a star contender in terms of sector performance, mid caps are expected to achieve the best performance in 2014, with 41% of respondents favouring the asset class.
“I am particularly interested to see that respondents still expect mid-caps to outperform despite the strong run they have enjoyed over recent years,” Ian Aylward, head of multi-manager research, said.
Large caps achieved 35% of the vote, while 23% expected small caps to outperform in 2014.
