Performance in major global equity indices this year will trail returns in 2005, according to the Fearless Forecast Survey conducted by Mercer Investment Consulting. Respondents estimated that global equity markets will finish 2006 with a median return of 7.6%, down from the 9.5% return of the MSCI World Index, while they expect the MSCI Pacific ex Japan Index to close at 8.8%, compared with 13.8% last year.

"The positive performance delivered by equities markets in 2005 has raised expectations for another sterling run in 2006, although fund managers perceive the ride to come at a slower pace," says Mercer's Garry Hawker, who heads Asia ex-Japan team.

Those polled in general expect greater volatility in the equity markets, especially outside the U.S.