3 out of 10 fund managers cautious on bonds

No wonder they're moving to equities.

According to HSBC’s latest Fund Managers’ Survey, global fund managers are looking to move to equities from bonds in the third quarter of 2012.

Here's more from HSBC:

More fund managers are bullish on equities with 40% of them holding overweight views in 3Q 2012 from 25% in the second quarter. Only 10% of fund managers (vs 25% in 2Q 2012) held underweight views on equities this quarter.

As safe haven flows have pushed some bonds to overvalued levels, fund managers turned cautious on bonds with 30% holding underweight views in 3Q 2012, compared to 0% in 2Q 2012. A tenth of fund managers held a positive outlook towards bonds (10%). More fund managers are neutral (56%) on cash in 3Q 2012, reflecting a relatively optimistic market outlook.

Paul Arrowsmith, Head of Retail Banking and Wealth Management, HSBC Singapore, said: “The survey shows an improvement in investment sentiment across global fund managers. With fears of a disintegration of Europe’s currency union somewhat abated, fund managers are starting to see opportunities in equities based on valuation." Seven in ten fund managers held overweight views on North American equities given its relatively resilient economy, while half held overweight views towards European equities (ex UK).

Fund managers turned more positive on Asia with 40% and 50% of fund managers holding overweight views on Asia Pacific ex. Japan and Greater China equities, respectively. No fund manager held underweight views on these particular equity funds.

Mr Arrowsmith added: “The survey points to regions that offer strong growth opportunities. Investors continue to favour Asia Pacific equities particularly in Greater China as further monetary easing policies and fiscal stimulus in China are expected while the majority of fund managers are positive on North American equities, on the back of market performance and signs of economic recovery.”