A preference for active over passive funds was seen across European, US and emerging market equities, but was most acute in emerging markets, where 90% of fund selectors prefer active strategies.
The preference for value over growth equities runs across the US and Europe, but is most prevalent in Europe, where 62% of investors favour a value approach. Emerging markets is the exception, with 54% of investors preferring growth strategy. Increasingly in emerging markets investors are also favouring small cap over large cap strategies (46% versus 29%).
This may be a function of valuation. As the valuations of dependable growth stocks have climbed, investors have sought out value stocks. Data from S&P suggests that value strategies have gained momentum for the year to date in 2014, with value stocks within the S&P 500 gaining 7.3% compared to 5.4% for growth stocks. In emerging markets, where valuations are lower, investors have less need to seek out value.
Valuation may also explain the dwindling preference for US small caps over large caps. Although investors in European equities still favour small cap over large cap, US small caps have seen a lengthy bull run and now look expensive on most measures.
There is also a notable improvement in sentiment among Swedish investors towards late cycle investments such as frontier markets and commodities. 62% of investors are planning to increase their weighting in frontier markets over the next 12 months. The performance of commodities funds has started to improve since the start of the year and almost 19% of investors plan to increase their weighting.
Bonds continue to be unpopular with Swedish investors with none planning to increase their weighting to corporate or government bonds over the next 12 months.