It's January, which usually means two things: One - a list of New Year's resolutions (coupled with the mandatory detox) and two: predictions of what the coming year will hold. Having listened to the analysts, fund managers and other experts, and analysed the trends and themes of recent years, we're doing crystal ball gazing of our own - giving you a heads up on the funds we expect will do well in 2011.
The general consensus
Following what has been labelled as the 'lost decade for equities' there is a general consensus among fund managers that shares, not bonds, will be the place to be in 2011. Attractive valuations coupled with recovering growth and corporate activity are just a few of the factors opening up enticing investment opportunities in the asset class. "Earnings growth is good and companies are well placed to increase dividends. Markets, distracted by macro concerns, have ignored these positives - an oversight I expect to be rectified in 2011," comments James Smith, manager of the Ignis Global Growth Fund.
Other predictions are that interest rates will remain low as monetary policy remains loose in the developed world, while the quantitative easing (QE) measures by the US Federal Reserve could sustain asset prices by sending a wave of liquidity washing around the world. This could push riskier assets such as equities up even further. However, it could also leave investors facing new risks - such as asset bubbles and rocketing inflation.
Given this backdrop, we have identified three key themes that we expect will dominate the funds investment arena in 2011. These are: a rise in inflation rates, particularly in the world's emerging markets, a continuance of investors' search for income, and buoyant growth in frontier markets. Read on!
