A few fixed interest trends stood out: first, the sell-off in developed market government bonds has radically slowed down – presumably people have finally hit the bottom of their allowed allocations; second, appetite for high yield has overtaken appetite for both EM government and corporate debt; and last, almost as many people want multi-asset fixed income portfolios as want traditional long-only bond products.
Multi-asset trend
This move to multi-asset seems to be a trend across Europe, and is matched by the increase in absolute return-style portfolios, both in fixed income and equities: almost 60% of respondents said they were going to increase their absolute return weightings – twice as many as last year.
Normally a desire to move to absolute return would indicate defensiveness – but it seems not: the overall macro outlook was strong – around 70% of Belgian investors were optimistic about the future (almost twice as many as last year) and this was despite the fact that two-thirds of the room thought their government was not competent to manage the economy!
European stocks in demand
On the equity side, Europe stood out – to the surprise of many US-based investors and economists, there was a strong trend to increasing EU equity weightings – with value investing being the preferred route by some margin. The only other equity area where buyers outweighed sellers was Asian equities – but not general global EM.
Looking at US equity markets themselves, the main distinction was between the point of view of the US equity fund managers present – which was that the US was in a state of sustainable recovery, both in terms of corporate health and national fiscal management – and that of the investors in the room, who remained mostly suspicious and unwilling to commit more to this asset class.
Click here to see a slideshow of photos taken at Expert Investor Belgium.
Platinum members can additionally view a full breakdown of the event voting data here.
