Only some 18% of Barcelona-based fund buyers attending Expert Investor Barcelona last week plan to increase their exposure to alternative Ucits bond funds in the next 12 months, down from 29% a couple of months ago. Moreover, almost half of the delegates at the event have disengaged from the asset class altogether, an increase of more than 300% since October. Absolute return appetite overall is still pretty robust at 42% buyers, but this includes long-only multi-asset products, an asset class which is very popular in Spain at the moment.
A failed experiment
“My experience with absolute return funds has been a disaster in general,” David Bosch, an investment manager for Medpatrimonia in Barcelona, told Expert Investor Europe. “Last year I tried to introduce several funds that are supposed to be absolute return, but none of them worked. Maybe the reason is that 2014 was a very good year for fixed income in the middle and long part of the curve,” he says.
So Bosch decided to sell all his absolute return exposure in the second half of last year, a decision which he doesn’t regret. “2015 has started much on the same note, and results have not improved,” he concludes.
Long/short funds are aimed at investors who wish to weather a possible storm. But if markets stay benign and do not show too much long-term volatility, they often underperform their long-only peers. And that’s exactly what has happened over the past years for both long/shorts bonds and equities. Funds in the latter category only managed to generate average returns of 0.56% in 2014, according to data collected by Kepler Partners. Appetite for the asset class among Catalan fund selectors decreased accordingly from 47% to 35%.
Click here to see a slideshow of photos taken during Expert Investor Barcelona.
Click here for a full breakdown of the event voting data.