We spoke to five leading fund managers to find out what sectors they were backing to outperform in 2014.
I think there will a big opportunity is US rates in 2014. It strikes me that there is a lot of complacency with respect to the timing of a first Fed rate hike in the front end of the US curve. Once taper is done, there will be speculation on the timing of a rate rise. At this point forward guidance will count for little and data will be what drives the market.
A rate hike in Q1 2015 or even late next year is a possibility if data is strong as we expect, yet markets place a negligible probability on this at the current time. Markets are myopic and the economy can look a lot different from 6 months from now. Moreover markets are much too sanguine on the Fed and Janet Yellen - it is the data which will count.
Chris Bullock, AAA-rated, Henderson HF Euro Corporate Bond
With tapering now very much anticipated, long-dated Dollar corporate bonds may surprise to the upside next year as pension funds step back in now they are back close to surplus.
I am overweight IT, healthcare and consumer staples. IT does well in rising markets, healthcare and consumer staples stabilize the portfolio in difficult markets. I think that in these sectors, some companies are still moderately valued.
I'm very positive for German consumption to pick up more next year and so we like names like Beiersdorf and Henkel, which we think will do well.
Andreas Zöllinger, AA-rated, BlackRock's BGF European Equity Income
We are very keen on the insurance sector at the moment, on a pan-European basis.