Emerging market equities are viewed as having the best valuations by managers: 64 percent believe emerging market equities are undervalued, up from 57 percent in the fourth quarter. European equities are seen as undervalued by 54 percent of investment managers. This compares with 30 percent of the managers who view U.S. equities as undervalued while 42 percent see U.S. equities as appropriately valued. Even though emerging markets seem to have the most favorable valuations, they are ranked fourth in terms of bullishness, behind U.S. large cap equities, non-U.S. developed markets and U.S. small cap equities.“Investment managers expect continued improving fundamentals within the U.S., supporting their bullish view on U.S. equities, despite less favorable valuations,” said Mark Meisel, Senior Investment Product Specialist of the Multi-Manager Solutions group, who oversees the survey. "When asked about investing in emerging markets, 41 percent of managers said there are still too many uncertainties and 27 percent responded that fundamentals do not support their current valuations." On the bullish-bearish spectrum for broad economic sectors, managers continue to be most bullish on information technology, industrials and health care:
- 58 percent of the managers are bullish and 10 percent are very bullish on information technology
- Utilities (67 percent), telecomm services (50 percent) and materials (31 percent) have the largest percentages of managers rating them as bearish
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