“In France, investors often use quite a broad definition for absolute return. They also tend to include multi-asset funds such as the Carmignac Patrimoine Fund,” explains Nicolas de Zaluski, multi-asset specialist for investment boutique Optigestion explains. “Another reason could be that many fund selectors already have reached their maximum allocation to alternatives.”
Large cap bias
Next to buying more multi-asset products, Paris-based fund selectors are also shifting their preferences away from risky to more stable equities, following a trend seen at previous EIE events across Europe.
After almost two years of an equity bull market, fund buyers from France are shying away from small caps and growth equities. Almost six in ten delegates prefer large caps over smaller companies for European equities, while only 21% favour small caps.
The French also prefer value stocks over growth stocks across all equity regions. Their preferences mirror those of their Spanish peers attending Expert Investor Madrid only a week earlier, who also voiced a clear preference for value large caps. The preference for large caps among delegates might be due to fears of the longer-term consequences of central bank policies.
France’s fund selectors are remarkably cautious regarding their macroeconomic outlook as well, with a large majority taking a neutral rather than positive view. This is quite different from their European peers who are generally positive about their macroeconomic outlook.
“There are some areas on the equity market looking phenomenally expensive, such as US small caps and technology and biotechnology stocks. We have seen part of those starting to crack already,” said multi-asset manager for Schroders Iain Cunningham during the plenary debate at the end of the event.
“The central banks’ policies to boost asset prices hoping to create a wealth effect that will trickle down to boost the real economy are dangerous. The Bank of Japan takes it the furthest by basically writing beneath their policy statements that their policy is conducive to pushing equity prices higher.”
US equities out of grace
While appetite for emerging market debt has multiplied this year, and appetite for European equities remains robust, US equity sentiment has waned strongly. Some 37% of delegates are planning to decrease their weighting to US stocks in the next 12 months or do not use the asset class. Only about half of this number is increasing their weighting, pushing US equity sentiment into negative territory for the first time since September 2012.
Click here to see a slideshow of photos taken at Expert Investor France.
Platinum members can additionally view a full breakdown of the event voting data here, as well as long-term comparison graphs on the main asset classes here.
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