Fund managers in the US have become more optimistic over the state of the US economy and markets, according to Hans Hamre of multi-manager specialist FundQuest.
Hamre says evidence of a recovery in corporate earnings has led to widespread recognition the US economy is on the mend.
Inflation is unlikely to cause problems in the immediate future as wage growth and interest rates remain low while the weak dollar is boosting companies' global market share.
This is prompting a renewed optimism amongst managers, Hamre says.
His comments come after a recent trip to the US where he met with a number of prominent equity managers.
From 9 March to early December, the S&P 500 index shot up 65% but Hamre agrees with the more bullish managers that equities remain cheap because the economy and earnings will exceed expectations.
"The P/E on the S&P is about 14.5 times next year's consensus earnings - a rise of 30% off this year's low base," he says.
Hamre says the cautious camp is still wary high unemployment and a higher propensity to save could stall the recovery.
To prepare for a period of uncertainty, investors are buying leading blue chips, Hamre says.
Most popular are global companies with steady growth prospects in the technology and healthcare sectors.
And I thought I was the sensible one. Thanks for setting me srtaight.
And I thought I was the sensible one. Thanks for setting me srtaight.
Posted by: Idalee
03 Jul 2011 | 12:33
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