from low vol to smart beta notes from amsterdam

Looking at the voting results, the indecision which was apparent at last year’s event has given way to divided but more certain opinions. The proportion of fund buyers uncertain of the macro outlook has more than halved to less than 20% since last year, those votes going mostly to the optimists (almost 50%), and the pessimists (the remaining 30%).

Appetite for European equities has strengthened significantly – those looking to sell dropped from almost 40% last year to nothing, while the buyers and holders were both boosted. The final big change in equities is the US, where the 40% buying rate has collapsed to around 10% – a strong response to the Fed’s recent decision not to start tapering.

EIE asked some more specific questions about investors’ views within the market sectors – market cap, value vs growth, long-only vs long/short. And the results were stark – there was a strong vote in favour of long-only exposure to large-cap value stocks.

One of the big discussion points of the day was about the use of low-volatility stocks – whether they should be accessed through smart beta products, or active management; and whether low-vol indices (and indeed all alternative indices) add value simply because of their being different from the mainstream.

There was very interesting discussion on the Fed’s policy response and its impact on the entire range of fixed income strategies. Interestingly, the fixed income speaker was happy to concur with the audience that all bond markets were under threat. But that doesn’t mean you can’t make money – you just need flexibility in your mandate and a skilled and truly non-index tracking fund manager.

One comment was overheard: “An absolute return multi-asset fixed income fund seems like a perfect solution – but I don’t think many of us could get away with using it.” That sounds like a time to have a long, hard discussion with the investment committee…

Click here to see a slideshow of photos taken at Expert Investor Netherlands.

Platinum members can additionally view a full breakdown of the event voting data here.

Dylan Emery

Dylan Emery is the group editorial director of Last Word. He is one of the founders of the company and he created International Adviser, Portfolio Adviser and Expert Investor. His primary responsibilities...

Part of the Mark Allen Group.