Fund groups say corporate governance issues increasingly important

Fund managers broadly expect corporate governance issues to increase in importance for the fund industry over the next year according to the Morningstar European Fund Trends Survey for March 2006.

Christopher J. Traulsen, CFA 24 March, 2006 | 5:34PM
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Some 61% of respondents to the survey indicated they thought corporate governance issues would increase in importance for the funds industry “a lot” over the next twelve months. More than three fourths said that they thought fund companies should play an active role in company management “to a great extent” (16%) or “to some extent” (61%).When asked in which European markets fund managers took the most active role in corporate governance, a majority of respondents chose the UK.

Europe to be best performing market?
There was a marked shift in the outlook of respondents for regional outperformance. Thirty three per cent of respondents said Europe would be the best performing market over the next twelve months. Th

at was enough to make it the clear favourite in this regard, unseating Japan, which had been favoured by respondents since Sept. 2005. Fund managers continued to predict the U.S. would be the worst performing market over the next twelve months, in keeping with past surveys.

Style: Large Caps and Growth Still Favoured
A majority of fund managers predict that large-caps will outperform small caps over the next twelve months, while nearly three-quarters of respondents said that growth equities would outperform value equities. Both trends are also in keeping with what Morningstar analysts in the U.S. have been hearing from large fund groups in that country for some time.

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About Author

Christopher J. Traulsen, CFA  is director of fund research, Europe and Asia, Morningstar.

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