Breakout

Investment Professionals See Stocks as #1 for 2013: CFA

Jeff Macke
Breakout

You wouldn't know it from the parade of negative nabobs dominating financial media but optimism towards equities and the global economy is actually on the rise. According to the CFA Institute's annual Global Market Sentiment Survey, 50% of financial professionals surveyed say equities will outperform next year, up from 41% in the same survey last year.

Optimism is also up in regards to the economy, at least compared to the mood last year. 40% of CFA Institute members are looking for economic expansion, with 20% looking for a downtick, compared to 34% and 29% respectively last year.

"There's some good news and some bad news," says Kurt Schacht, managing director at the CFA Institute. "Overall it's a lot brighter outlook for 2013 both on economies, local and global economies, and it's a bright outlook for equities, with the exception of Europe."

Ah, yes, Europe. A soveriegn debt crisis is the top concern of 37% of respondents, well above the 31% concerned about continued economic weakness. The survey is broken down by regions of the world. Curiously, Schacht says the Europeans are sanguine about the global situation and generally think the debt crisis will be resolved favorably, but are "dismal" on their own local economies.

How negative are they? Schacht says that 50% of those surveyed in Spain, France and the Netherlands are looking for economic contraction next year compared to an overall average of 16% for the rest of the world.

Typically the best way to use surveys of this sort isn't to look at absolute numbers, but trends. As Schacht reads the data, an increase in optimism compared to last year is directly leading to more risk-taking in the form of CFA Institute members pushing towards equities.

Rounding out the assets expected to have the highest returns next year are precious metals (22%) and commodities (16%) with bonds and cash lagging well behind the others.

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