Mercer sees modest growth for 2011

2010 was a good year for the Canadian economy. “Canada was one of the first G7 nations to climb out of the recession,” said Mark Fieldhouse, principal, investment consulting practice, with Mercer, speaking today at Mercer’s 2011 Fearless Forecast at The Toronto Board of Trade.

And 2011 will look a lot like 2010, he explained.

Managers polled for the forecast predict that the economy will continue to grow, but at slower pace, with global growth mainly driven by emerging economies. Survey respondents also predict that the Canadian dollar will remain close to par with the greenback at the end of the year.

Managers expect equity markets to have the highest expected returns in 2011, with emerging markets leading the way. They expect returns of roughly 8% over most of year. The demand for commodities will also continue to rise due to emerging economies.

Bond markets, on the other hand, will lag as interest rates continue to climb.

Managers predict that fixed income will be the lowest performing asset in 2011, with long-terms bonds delivering only a 0.3% return and the broad and corporate bond markets to return only 2.0% and 3.0%, respectively.

Alternative asset classes are expected to fall somewhere in the middle.

The Mercer 2011 Fearless Forecast survey polled 56 Canadian and global institutional investment managers—representing $8 trillion in assets under management worldwide—in mid-December 2010.