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Asset managers prefer Japanese over US equities

Despite all the talk about the US equity Trump-boost in recent weeks, Japanese equities are actually a lot more popular with asset managers. Their consensus is that they will return more than 5% in 2017.


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According to Expert Investor’s monthly Fund Manager Sentiment Survey, return prospects for Japanese equities have risen sharply since September, perhaps on the back of increasing political uncertainty in other parts of the world.


Emerging markets stood out as a haven of comparative attractiveness until recently, but sentiment towards that asset class has taken a bit of a hit after Donald Trump’s election last month. Japanese equities are now the only asset class for which most participating asset managers expect returns of more than 5% over the next 12 months. 


By contrast, return expectations for all other major asset classes have come down since September. Asset managers seems unconvinced that the Trump-boost for US equities will be powerful enough to last into the second half of 2017, it seems. The consensus expected return for the next 12 months is slightly positive for US small caps, and marginally negative for large caps.