The majority of asset managers now believe emerging market equities will return in excess of 5% over the next 12 months. The last time this was the case was in March 2013. While expectations about emerging market equities are on the ascent, those for European equities have started to cloud: since the Brexit vote, asset managers have continuously downgraded their return expectations, which are now at their lowest level since October 2014 (see chart below).
Asset managers hereby have finally followed in the footsteps of their clients, fund buyers. Since April, the latter have been stepping up their interest in global emerging market equities, and have become cooler towards European equities, according to Expert Investor investment sentiment data. This trend has been confirmed by Morningstar fund flows.
