Posted inAnalysisEquitiesEurope

Fund selectors disagree most on European equities

Every three months, EIE asks some 300 fund selectors about their asset allocation intentions. Compared to this spring’s results, more investors are now planning to decrease their exposure to the asset class. Fund selectors seem divided on the question whether disappointing economic data for the region followed by a slump in the equity markets are just a temporary setback or of a longer-lasting nature.These diverging views have resulted in European equities now being the asset class with the highest standard deviation.

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North-South gap

Sentiment towards European equities is now more divided than ever across the continent. Fund selectors in the south of Europe are still very much upbeat about European equities, with a majority of fund buyers in Spain, Portugal and France intending to increase allocation. In central and northern Europe, with the exception of Sweden, appetite for the asset class is significantly lower. Only 15% of German fund selectors and 16% of Belgians say they will increase allocation. In Denmark and Norway, about a quarter of fund buyers will step up exposure.

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High yield consensus

While European fund selectors disagree on European equities, a Pan-European consensus has emerged around high yield bonds. Overall, very few fund buyers have confidence in the asset class with many finding it overvalued. In most of the surveyed countries, between 33% and 43% of fund selectors will decrease allocation to developed market high yield credit, while only 5 out of 14 countries harbour more than 8% buyers of the asset class.  

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Part of the Bonhill Group.