Previous U.S. equity barometers

Barometer of European interest in U.S. equities

September 2009

During September 2009 Phoenix-IR researched the views of European investors in U.S. equities. The objective is to track their changing perceptions and by sharing the results, help improve communication and understanding between Europe’s investors and North America’s issuers. The research sample covered 86 leading institutions based in nine European countries (UK, Switzerland, France, Germany, Belgium, Ireland, Italy, Netherlands and Sweden) managing total assets in excess of $4,000 billion. The results show that Europeans have been buying U.S. equities but they are now pausing for breath after the market’s rapid ascent. The market is seen as more fairly valued and the wide divergence of sector preferences has narrowed.
What do you think of the current valuation of the S&P 500?
  • 59% of investors believe the S&P 500 is fairly valued, up from 51% last quarter
What is your current weighting to U.S. Equities?
  • Europeans are net overweight the U.S. equity market for the first time in a year
  • Underweight portfolios have declined significantly from 45% a year ago to 24% today
Over the next 12 months, do you intend to change your weighting to U.S. Equities?
  • Less optimism for next 12 months – not surprising given recent run
  • 64% won’t change weighting while only 17% at risk of decreasing and 19% intend to increase
What are your current U.S. sector allocations?
  • Divergence of opinions has clearly narrowed over the last year
  • Technology sector leads the way as the most popular sector
  • Utilities is now the clear loser with the largest underweight
What is your current view on U.S. sector valuations?
  • Most sectors clustered around the fairly to slightly undervalued range
  • Exceptions are Consumer Discretionary which is seen as significantly overvalued and Health Care, still seen as massively undervalued
Over the next 12 months, what do you expect the U.S. dollar to?
  • Europeans were positive on the dollar throughout 2008 but have been negative all this year
  • However, sentiment has improved slightly
Market expectations for corporate earnings for the next 12 months?
  • European investors have believed the market has been excessively optimistic up to now
  • Only 8% of respondents feel the consensus is still too high - a significant positive swing in sentiment over the last year
How would you describe your current cash position?
  • 52% describe cash positions as normal although a net 20% of respondents are still higher than normal
  • Net balance has fallen as investors have committed more money to market but still reflects caution
Where do you think the S&P 500 will end the year?
  • Expectations have clearly turned with >65% of respondents expecting the market to end year >1000
What is the average holding period of stocks in your portfolio?

What is the Active Share Ratio of your portfolio?

Where do you stand on the “inflation vs. deflation” debate?
  • More investors expect inflation than deflation
  • From 2011 onwards, inflation is the clear favorite over deflation

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