Managers predict softer returns in intl markets

Investment managers expect that performance of equities in 2006 will lag 2005 double-digit returns for major global equity indices, with a particularly sharp decline in the outlook for emerging markets, according to Mercer Investment Consulting’s annual Fearless Forecast survey.

Global equity markets will achieve a median 7.6% return in 2006, the global investment managers in the Mercer survey predicted, which compares to a 9.5% return for the MSCI World Index in 2005 and annualised historical returns for the past three years of 19.3%.

The managers predicted a median return of 8.0% in 2006 for the MSCI EAFE (Europe/Australasia/Far East) Index, which compares with a 13.5% return posted in 2005. However, there was wide variation in the predictions, from 3.0% to 13.2%.

Consistent with this wide range, investment managers in all regions surveyed expect more volatility in the equity markets in 2006 compared to 2005, particularly outside the United States.