SYDNEY, June 27 AAP - More than half of investment managers say local equities are overvalued and that private equity was a culprit in pushing share prices higher than their worth, a survey finds.
Although the resources boom had many managers bullish on the energy and materials sectors, negative sentiment was growing on Australian equities amid the extended bull run.
The Russell Investment Managers Outlook (IMO) surveyed 55 local fund managers on a range of investments including local and international equities, listed property trusts, bonds and cash.
In the June survey Australian fund managers thought differently to their US counterparts on domestic markets, with 54 per cent of the Australians saying the local market was overvalued - up from 49 per cent in the previous quarter.
This was in stark contrast to US managers where only 17 per cent said their domestic market was overvalued.
And 70 per cent of local managers felt that private equity was pushing share prices higher than their worth while also introducing excessive leverage to the market.
A theme from all the Russell's IMO surveys has been the preference for international shares, chief investment officer for Russell in the Asia Pacific Peter Gunning said.
"In the June quarter, 57 per cent of managers remain bullish on the 12-month outlook for international equities - a number largely unchanged since the first Russell IMO was released in June 2005," Mr Gunning said.
Despite the Australian equities market returning 12 per cent for the year to date, local investment managers remained steadfast in their view that global markets offered greater value.
The two best-performing sectors in the survey were energy and materials, with energy having a record 63 per cent of managers having a bullish view.
The proportion of fund managers with a positive view on materials grew from 43 per cent to 57 per cent.
Managers had bearish views for bonds, listed property trusts (LPTs) and small-cap Australian equities, with bonds returning only 1.5 per cent for the year and LPTs not performing much better.