Aviva: Large caps to outperform small caps

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A survey from Aviva Investors has revealed that fund managers expect large caps to deliver the greatest performance in 2015.

The Aviva Investors Multi-Manager Survey asked fund managers, representing more than £2trn (€2.8bn) of assets under management, for their views on the outlook for markets, including return expectations and likely macro-economic influences for 2015. The respondents were largely based in the UK, but with a global investment scope.

The Aviva Investors Multi Manager Survey on equities revealed that 53% of managers surveyed expect large caps to deliver the best performance in 2015. Just 6% expect small caps to deliver the greatest performance over the same period.

Fifty per cent of respondents ranked the healthcare sector as likely to provide the greatest performance in 2015. Technology was in second place, with mergers and acquisitions activity cited as a potential driver of performance. The consumer discretionary sector was in third place.

Fifty-two per cent of respondents indicated that market uncertainty and macro-economic issues were the biggest risks facing equities over the next 12 months. Investor appetite for equity risk was the next biggest risk, accounting for 16% of respondent’s answers.

The biggest opportunity for equities in 2015 lie in continued economic recovery and strong earnings growth for 59% of those that answered, with increased M&A activity providing the next biggest opportunity, accounting for 22% of respondents.

Ian Aylward, head of Multi-Manager Research at Aviva Investors, said: “Fund managers are broadly optimistic for equities this year. In contrast to the outcome of recent years, large cap names are expected by a majority of respondents to lead the market higher. With the exception of Japanese equities, most respondents expect returns in each region to lie between 6% and 10%. For Japan, most respondents expect returns of between 0% and 5%. This is in line with our view as our portfolios continue to be overweight equities.”

Additional findings include:

  • The US market is seen as the region with the highest expected GDP growth.
  • 66% of respondents expect Eurozone issues to affect the market negatively in 2015.
  • Fund managers broadly believe Abenomics will be successful in Japan, with 61% backing the government’s economic policy.
  • 72% of respondents expect the same or an increased level IPO activity in 2015, compared to last year.
  • An overwhelming 97% do not expect Eurozone interest rates to rise.
  • 78% expect US interest rates to rise, and close to half (48%) believe UK interest rates will increase in 2015.
  • Volatility in oil prices is expected to continue: 53% suggest oil prices will be between $60-$80, with 43% suggesting the price will be lower at $40-$60 a barrel.
  • Market volatility is expected to increase in 2015. Only 3% of those surveyed expect volatility to decrease, with the remainder suggesting that volatility will increase (78%) or stay the same (19%).
  • 9% expect flows into equities to decelerate in 2015.
  • For UK markets, most respondents expect equity index returns to be between 6-10%, while in the US an equal amount (42%) chose either growth of between 0-5%, or 6-10%. In Japan, 38% expected equity index returns of between 0-5%


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