Nearly half (47%) of the 800 high net worth investors surveyed see European equities outperforming other regions, while 35% still believe US equities will lead the way in 2016.
It was private equity, however, that emerged as the favoured asset class (33%) this year, followed closely by public equity markets (28%). This is in contrast to 2015 where over half of investors believed equities would perform the best.
Hedge funds also attracted some attention, with 16% of investors expecting them to provide good returns over the next year, while clients also thought commodities (14%) would fare well.
Market risks in 2016
Following a shaky start to the year, a number of factors are worrying financial markets worldwide.
In Europe, Brexit and Spain’s general election are the focus, while many are watching the US presidential race closely.
“Despite uncertainty from global monetary policies, China’s slowdown and plunging commodity prices, our clients remain positive about the investment environment.”
Client fears surrounding the Chinese economy also remain, with 30% believing they could suffer a hard landing this year.
Some regional variations can also be observed, with over half of German investors (52%) mostly concerned about global geopolitics, whilst Spanish investors (9.6%) fear this the least.
Optimism on US interest rates
When asked where the US Federal Reserve Federal Funds rate is expected to be by the end of 2016, a large proportion of investors (37%) believe rates will rise to between 1% and 1.5%.
However, caution remains amongst some investors, with over half (59%) expecting the Federal Funds rate to remain under 1% for the year.
Geographical opinion is consistent across Europe, except for Spain where there is an even divide between investors who think rates will remain under 1% and those who believe it will rise towards 1.5%.
Three-fifths (61%) of clients believe oil prices will remain close to where they currently reside between $30 (£20,74, €26.50) and $40 per barrel for the rest of 2016, while a third (28%) are slightly more optimistic, expecting prices to rise to between $40 and $50.
In 2015, a third of investors correctly predicted that oil prices would fall to between $30 and $45 a barrel. A portion of respondents (14%) expect oil prices to drop again and predict prices could slip to below $30, whilst only 6% think they will rise to above $50 by the end of the year.
“Despite uncertainty from global monetary policies, China’s slowdown and plunging commodity prices, our clients remain positive about the investment environment,” Peter Gabriele, EMEA head of investments at JP Morgan Private Bank, said.