While I have no clue which asset classes will outperform this year, but the latest results from Citi institutional investor survey are indeed intriguing, as Tobias Levkovich writes:
Our most recent fund managers’ poll, conducted this past week, and encompassing nearly 100 responses, shows meaningful changes from early January’s results. In particular, enthusiasm for the dollar has weakened significantly, as average cash holdings dipped and the desire to buy stocks has edged lower. Plus, more than 50% see a bigger chance of the markets sliding 20% than gaining 20%, a sharp reversal from the January 2011 view, when nearly 70% saw a large gain as being more likely.
While more than 50% see a bigger chance of markets falling 20%:
Overall, investors still like US stocks compared with other asset classes (see Figure), but commodities have gained some traction of late, as dollar weakness fears probably are contributing to the mix. Indeed, most investors now think that the dollar will weaken further as opposed to what proved to be inaccurate optimism for greenback strength in January. This may reflect the budget fears but also the expectation that the Fed will not be lifting short-term rates until 1H12.
Click on chart to enlarge, courtesy of Citigroup Global Markets.
Indeed, why not falling in love with US equities? Well, I still prefer to be contrarian ...