Both fund selectors and fund managers have been bearish about US equities for quite a while, against a backdrop of the Fed planning to raise rates, possibly as early as this week. Now, Joachim Klement, chief investment officer of the Swiss fund consultancy Wellershoff & Partners, has provided a statistical back-up for their pessimism.
Return expectations from US equities among asset management companies are at a post-financial crisis low. EM equities may look cheap after last week’s correction, but asset managers have their reasons to stay sceptical.
European investors again added to their US equity allocation in July after a 6-month pause. Net inflows amounted to €2.7bn, the largest since February 2014.
China’s shadow over global markets is pushing a US interest rate rise to December, and unless it relinquishes its grip the wait could go on even longer.
Which criteria do fund analysts value most when they conduct an investment fund screening process? Research firm Cerulli asked the question to a sample of fund analysts based in the United States. The answer? They care most about the costs, and much less about track record.
The Danes are once again Europe’s most optimistic investors, with a record 83% of them having a positive macroeconomic outlook. They are in a convincing risk-on mode, with continuously high demand for European equities and relatively big appetite for risky bonds.
Fund selectors in Europe have changed tack. A year ago they were strongly in favour of small caps, but now they believe it’s large caps that have the better return prospects, according to data gathered at EIE events across Europe this year.
Relatively high valuations in a particular stock market are followed by a steady appreciation of the home market’s base currency in the next five years. Therefore it’s very likely that the dollar will resume its upward trajectory versus the euro.
The announcement by the Icelandic government last week that it is planning to lift the capital controls on the island can already now be seen as a watershed moment for local fund selector polls, at the Expert Investor Iceland held last week in Reykjavik revealed.
The events of recent weeks could lead investors to draw a stark conclusion; there is no such thing as a ‘safe haven’ in investment terms any more.