Investment managers have taken a dim view of the prospects for a euro-zone recovery by the end of the decade, research from consultancy Towers Watson shows.

Nearly 60% of respondents to its survey of 128 global managers expect anaemic and volatile growth from the currency bloc over the next five years.

This contrasts to the 74% that expected mild growth in the US, and 61% who expected the same in the UK.

One-fifth said they anticipated a “boom” in China.

The bleak outlook for euro-zone growth combined with further statements from managers that showed 44% still thought recovery from the systemic crises seen in the union suffered from varying degrees of fragility.

However, 41% disagreed and said the situation was improving.

Managers also shared their top concerns with regard to investment and risk analysis, with a growing majority citing government intervention in financial markets.

Some 68% stated this, a growing figure from the 48% who responded similarly to the consultancy’s survey two years ago.

Robert Brown, who chairs Towers Watson’s investment committee, said this was no surprise.

“The knock-on effects from QE tapering, fiscal spending going into sequestration and the Volker Rule, on emerging markets, and OTC markets, have been significant,” he said.

However, similar concerns over global economic imbalances affecting investment strategies are beginning to diminish.

Only 34% citied this in 2014’s survey compared with 44% last year.

With regard to institutional investment strategies, 43% expected pension funds to become moderately more aggressive.

This is a change from previous surveys, where the plurality expected either no change, in 2013, or for schemes to become more conservative, in 2012.

Brown said this response from managers, given Towers Watson’s view on markets this year, was surprising.

“We rate equities ‘neutral’ as of January 2014, so the ‘buy’ side of this ‘risk-on’ posture that some expect calls for high selectivity, in our view,” he said.

Looking at specific investments, the US dominates positive sentiment from investment managers, as one-third suggested the equity markets across the Atlantic offered the most rewarding opportunities.

This compares with only 12% for the euro-zone, and a minute 4% for the UK market.

However, despite volatility in 2013, 17% are looking to frontier markets.

Within real estate, the US once again dominates sentiment, with 43% of managers looking to the country.

Some 18% suggest the euro-zone for top returns and 13% for the UK.

However, while sentiment for US real estate remained high, managers only expected a modest shift in allocations to alternatives.

Almost 60% of those surveyed said they expected an increase of 5-10% in the coming year, while one-fifth expected no change.

Overall, the investment managers provided strong views on how they thought institutional investors could improve investment success.

More than 30% of respondents cited the continuing importance of active management.

A recent survey by State Street concluded that some allocations to smart-beta could come at the expense of active allocations.

Towers Watson’s survey also cited asset allocation and the need for adequate risk controls to ensure positive investment performance.