Two thirds of Zurich’s fund buyers plan to increase their allocation to emerging market equities, up from 44% in September and 31% in January. The sentiment hike is not just an intention, it’s also visible in the fund flows published by the Swiss Funds and Asset Management Association (SFAMA). From July to end of September, emerging market equities enjoyed higher net inflows than any other equity category. In the three months before that, EM stocks were not even in the top-10 of net inflows.
Frontier market equities are also very popular in Zurich. A staggering 84% of delegates at the conference is invested in the asset class, contrasting with the Pan-European average of 58%.
Fund flows in million CHF (July-September 2014)
Enthusiasm for Japanese equities, which was registered by our researcher on his visit in September, has subsided significantly. The number fund selectors saying they will increase their allocation collapsed from 44% to just 11%, though the amount of sellers remains limited. Net inflows into Japanese equity funds also remain substantial, according to SFAMA data (see chart above).
European equities, on the other hand, remain out of favour. Only one in five fund selectors say they will increase their allocation, the lowest percentage in Europe after Germany. European equities do not figure in SFAMA’s buying top-10 either. To perfect the Swiss neutrality towards developed market equities: buyers and sellers balance each other out on US equities, while the remaining 47% leave their allocation unchanged.