A recent select survey of Portfolio Management Association of Canada (PMAC) members finds that professional investors have solid confidence in the financial future of equities despite present and foreseeable uncertainties, including growing inflation.

The survey results were Thursday at PMAC’s 2012 annual conference and annual general meeting in Toronto.

According to the survey, CEOs of Canada’s leading investment companies believe inflation will rise slightly, but meaningfully in the next 10 years to 2.8%, or almost one per cent higher than the actual rate of 1.9% for the previous 10 years.

That would offset bond returns which averaged 6.2% (DEX Universe Bond Index) over the last decade, but which will only earn 2.9% over the next 10 years, the respondents say.

These trends can be addressed in the coming decade through a diversified portfolio of equities. Specifically global equities, which the CEOs project will earn 7.8% — up from 3.6% based on the MSCI World Index $CAD (Gross) — and emerging marketing equities, which they believe will return 9.1%. This is on par with the 11.9% actual return of the previous 10 years based on the MSCI Emerging Markets Index $CAD.

PMAC respondents continue to believe in the value of Canadian equities, saying they will provide a steady 7.4% return over 10 years, down slightly from the 9.8% recorded by the S&P TSX Composite Index for the previous decade.

“The opinions expressed in this select audit of Canada’s best and brightest professional investors represent a courageous vote of confidence in the future of equity investing,” observes Katie Walmsley observes PMAC president.

“All investors should draw on these directional insights in making their asset allocation choices and consider the impact of higher inflation on their portfolios when making investment decisions.”

The qualitative audit of PMAC members represents the views of up to 24 CEOs of leading Canadian investment companies servicing institutional and high net worth clients. It is based on one open-end and five closed-end questions seeking informed projections of expectations for the financial performance of different asset classes and the rate of inflation. The survey was conducted in the days leading up to the 2012 PMAC annual conference and AGM.