Equities has been tipped by fund managers to be the best performing asset class in 2010, according to an annual poll by the Association of Investment Companies (AIC).

The poll found that 50 per cent of fund managers expect equities to have the most success in the New Year, while 28 per cent predicted gold will continue to do well.

The AIC’s research also showed that nearly three quarters of fund managers are optimistic about market prospects, predicting that markets will rise next year, while managers showed equal optimism about the prospects of the FTSE 100, with 58 per cent anticipating the market would close the year between 5500 and 6000.

Meanwhile, Blue Chips are no longer predicted to be the best performing sector, being knocked off top spot by resources including oil, as emerging markets were tipped to be the best performing region in 2010.

However, despite the majority of fund managers showing their optimism for the forthcoming year, they remain divided on whether they will increase their gearing in the next six months, with 28 per cent planning to do so and 22 per cent planning to decrease it.

Identifying threats to market returns, 28 per cent of managers believe low growth poses the biggest threat, while just over a fifth showed concerned that the recession may continue.

Discussing the findings, Annabel Brodie-Smith, communications director at AIC said: “Whilst it’s interesting to gauge the views of investment professionals, markets are impossible to predict and one year’s best performing region can sometimes become the following year’s worst performer.  

“So it’s important to take a long-term view, ensure you have a balanced portfolio and not to get carried away by the latest ‘hot’ sector.”

© Fair Investment Company Ltd