The inaugural ‘Financial Services Council Chief Investment Officer Investment Index’ shows Chief Investment Officers (CIOs) are mildly optimistic about the performance of Australian and international investments over the next 12 months, but are concerned about short and long term risks related to the slowdown of the US and European economies.

The quarterly Index, which is based on CIO responses from a sample of Financial Services Council members, measures 11 from a range of -100 to 100, where a score of 0 is considered neutral.

John Brogden, CEO of the Financial Services Council, said: “This new Index provides an insight into the factors weighing on the minds of Chief Investment Officers of Australia’s leading investment companies.

“While they expressed some confidence about the Australian economy, they are concerned about the risks presented by debt and deleveraging in Europe and the US.

“Overall, CIOs describe the investment environment as complex and fragile,” Mr Brogden said.

In terms of specific asset classes:

• Australian and international equities are expected to be the best performers over the next 12 months;
• International property is expected to perform better than Australian property; and
• Fixed income assets, both domestically and internationally, are not expected to perform as well as other assets.

The Index shows that while sentiment is on the whole mildly optimistic, CIOs have concerns about risks within the US and European economies. Their concerns are predominantly related to the fiscal positions of those regions and the austerity measures that have been taken.  They also have concerns about the risk attached to Australia’s increasing reliance on Asia, in particular China.

Looking to the longer term (five years), CIOs consider debt and deleveraging to be the most significant potential sources of risk.  Inflationary pressures are also considered potentially significant as economies move out of recession.

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