Investment managers are bullish on equities and emerging markets for the coming year, but are less in agreement on how bonds will perform, according to a recent survey. 

Managers expect anticipated returns on global equities to remain at 10% for 2011, with returns for other equity markets increasing to 10% from 9% in 2010, according to the poll by global professional services company Towers Watson.

The global survey is based on responses from 141 investment managers with assets under management of $13.5 trillion for institutional investors and $2.9 trillion for retail investors.

"This influential group of investment managers indicates that we continue on the path to recovery, but that it will be volatile and patchy depending on the market," said Carl Hess, Towers Watson's global head of investment.

According to the survey, 85% of managers are bullish for the next five years on emerging markets, with 79% holding that view on public equities, 54% for private equities and 49% for real estate. Managers turned neutral on hedge funds and bearish on money markets.

The survey showed a wide disparity on bonds, indicating a significant level of uncertainty about the potential yields on both short- and long-term securities. However, 76% of managers were bullish on emerging market debt, while 79% held bearish views on the prospects for government bonds. The overall view was neutral toward inflation-linked government bonds and high-yield bonds.

The survey also showed managers expect short-term government rates to remain low in 2011, except for Australia and China. Those rates are expected to trend up over the next ten years. Long-term government bond yields are expected to be moderate in 2011, but rise during the next ten years. Managers also expect real yields on 10-year inflation-linked bonds across all markets to start rising in 2011, setting a trend for the next ten years, contrary to last year's survey results.

"After two years of very easy monetary policy and of quantitative easing in the U.S. and U.K., monetary policy is set to slowly return to more normal conditions over the next years," said Hess. "While markets anticipate a gradual increase in policy rates, uncertainty around the timing and the extent of rate hikes will be a dominant source of uncertainty and market volatility."

Managers also expect GDP growth in all markets to range from 1.8% in Japan to 8.9% in China, with the U.S. up 3%, U.K. up 2%, the Euro zone up 1.8% and Australia up 3.2%. The study, which was conducted at the end of 2010 reported an expectation of crude oil to reach $92 per barrel in 2011. As of the writing of this article, crude oil has already topped $100 per barrel.