Bullishness towards Canadian broad market equities has dropped to 28% of managers from 42%, according to the latest Russell Investment Managers Outlook.
Despite the increase in bearishness, 77% of investment managers still expect Canadian equities to post flat to positive returns in 2008.
“It seems that many managers are cautiously waiting to see how the sub-prime credit crunch and rumours of a US recession will unfold, while at the same time betting that the Canadian market will be in a position to move ahead over the next 12 months,” says Timothy Hicks, Chief Investment Officer, Russell Investments Canada.
Sub-prime lending woes and troubling economic indicators have triggered a decline in bullishness towards equities among Canadian investment managers.
However, bullishness towards Canadian fixed income rose, indicating that many managers believe bonds have found a level of support following the sharp correction of earlier in the year. Bullishness towards Canadian bonds increased from to 39% of managers from only 15% on the heels of a sharp correction earlier this year.
In other markets, bearishness for U.S. equities has grown in number to 42% from 27%. And after a lengthy stint as managers’ most favoured market, bullishness towards EAFE equities plummeted from to 37% from 67%, and the number expressing optimism for emerging markets fell to 43% from 52%.
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