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Quarterly Chief Investment Officer Investment Index

20 Dec 2010
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Index reveals growing optimism among Chief Investment Officers

The latest ‘Financial Services Council Chief Investment Officer Investment Index’ shows Chief Investment Officers (CIOs) are growing more optimistic about investment performance over the next 12 months.

 The quarterly Index, based on CIO responses from a sample of Financial Services Council members, scored 25 from a range of -100 to 100, where a score of 0 is considered neutral. This is up from the score of 11 in the last quarter.

John Brogden, CEO of the Financial Services Council, said the Index showed CIOs were much less concerned about risks associated with the US economy than they were last quarter and more focussed on the Asia region.

“There is now increasing attention being given to the risk of a slowdown in China over the next 12 months,” Mr Brogden said.

“The possibility of a default in the Eurozone still weighs on the minds of CIOs, however sentiment towards the region is improving as fears of a contagion risk fail to materialise.

“On the whole, sentiment among CIOs is fairly positive with many respondents noting that sufficient risk is already built into investment markets.” In terms of specific asset classes:

  • Australian and international equities are again expected to be the best performers over the next 12 months;
  • Australian property is expected to perform slightly better than international property, a reversal from last quarter; and
  • Australian fixed income assets are expected to perform better than international fixed income, which was the only asset class to receive a negative score this quarter.

While this quarter’s findings indicate a growing optimism among CIOs, the risk of a slowdown in the Chinese economy is a developing concern for the year ahead.

Over the longer term (five years), CIOs consider inflationary pressures and moves to control these, especially in China, to be risk factors. Possible volatility associated with the increasing significance of emerging markets is also of concern.

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