MacroScope

Fund managers also fall prey to economists’ euro zone bias

September 4, 2012

If Reuters polls onthe euro zone this year have proved anything, it’s that forecasts concerning the future of the currency union really boil down to national bias and not just plain economics.

Last week’s global polls of fund managers proved that’s just as true of investors as it is for analysts.

It’s a well-established trend: economists working for institutions based inside the euro zone are far more optimistic about its future than those from Britain or the United States.

While that might not sound surprising, it somewhat undermines the idea their analyses are based purely on economics, and less on national perspective.

Fund managers, who control trillions of dollars (and euros) in assets, are just as prone to this sort of bias.

Not long after European Central Bank President Mario Draghi gave a strong signal he would do whatever it takes to defend the euro, the poll of global funds revealed UK and U.S. investors reduced holdings of euro zone bonds, while those based in the euro zone raised them.

An extra question in the poll went a long way toward explaining this marked difference in strategy.

In essence, the view of what’s happening in the euro zone depends whether you’re inside looking out, or outside looking in, for investors and economists alike.

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