Equity investors pare back expectations | Trading Desk | Investing ...

A potential reduction in stimulus by the Federal Reserve and weaker global growth has investors paring back their near-term return expectations.

These two risks and the strong first-half rally on major stock markets is prompting more caution for the third quarter even though a recent survey of global investors by Barclays showed the market remains constructive on equities.

The survey, which was open between June 2 and 7, captured the views of 304 institutional clients, including hedge funds, money managers, and proprietary and corporate trading desks.

More than 50% of respondents favour equities over other asset classes in the coming quarter, while those preferring high-quality bonds fell to 7% in Q2 from 10% in Q1.

?Most investors also perceive equities to be the likely outperformer in emerging markets over the next three months,? Barclays strategist Guillermo Felices said in a report. ?Equity investors continue to favour the U.S. market, but they have switched their preferred sector from global growth beneficiaries to domestically focused cyclicals.?

Almost half of respondents see equities as fairly priced, but the proportion that considers them undervalued fell to 27% from almost 40% in December.

In the next three months, 56% expect returns of -5% to 5%, compared to 45% in December. Meanwhile, 29% now expect returns of 5% to 10%, versus 44% at the end of 2012.

Source: http://business.financialpost.com/2013/06/13/equity-investors-pair-back-expectations/

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