iFast conducts an annual poll of the different fund houses to get opinions of their most and least favored investment sectors for 2011.
A quick snapshot of this year’s poll results are as follows:
It appears that the areas with the greatest consensus would be the most favoured region (Asia), least favoured region (Europe), most favoured Asian country (China), most favoured bond sector (Emerging markets) and least favoured bond sector (developed markets).
iFast further did a research to compare the poll results over the same few years with the actual performance.
They found out that the consensus was generally good at picking regional markets, but poor with their Asian single-country selections.
Often, the top country picked was just the top performer for the previous year and tended to perform poorly. The top picks for the various years and their actual rank (out of 10) for that year are as follows:
To add further insult to injury, the least preferred country actually performed better than the most preferred country in 2004, 2005, 2006, 2007, 2009 and 2010.
If you look at the performance from 2004-2007, you might even think that these were the most preferred countries. Now you know that even experts have difficulty getting the country selection right.
Which is why most of the time, I prefer to select regional funds for my clients and let the fund managers do a bottom up stock selection process rather than try to overweight particular countries. If anything, I’m more likely to avoid top performing countries than anything else.