More than half of fund managers (52%) are convinced global stock markets will be at least 10% higher in a year's time, according to the monthly European fund trends report by Morningstar, the fund rating and research firm.

Morningstar said that despite the bullish nature of many managers there is an expectation that investors themselves will shun equities. Net inflow of funds will instead go to fixed income funds and increasingly to balanced funds, said the research firm. Such risk aversion probably accounts for why some 42% of fund groups expect guaranteed products to dominate new product launches.