Fund managers tip shares for 2004

Shares as the preferred asset class for 2004, according to a group of fund manager chief investment officers interviewed by the Australian Financial Review. They expect high single-digit returns from both Australian and international shares this year with most gains coming in the first half of the year. There are not as many opportunities, however, as there were in early 2003, they say. But the CIOs warn that rising interest rates will affect fixed-interest performance with bonds likely to be a negative asset class. Higher rates raise bond yields but will put pressure on prices, at least until the second half of the year. The fund managers also expect cash to perform better than bonds in the short term. One asset class all the experts warn on is residential property for its unsustainably high prices.