European investors reduced their high yield bonds holdings by a net €12bn last winter. But the arrival of spring is heralding a change in sentiment.
In part two of a video interview, Jaap Bouma tells which long/short managers he has added to his portfolios recently. He also reveals why liquidity is all-important to him.
In this video interview, Jaap Bouma of Dutch wealth manager Optimix explains why he has finally decided to replace part of his fixed income portfolio with liquid alternatives. But he also admits he is ready to ditch this allocation again.
Fund selectors expect an annual return of less than 2% from their bond portfolios over the next five years. The Great Rotation is therefore finally happening. However, it’s not from bonds to equities, but to absolute return.
Global equity markets are experiencing their worst start to the year since 2008. While some are fearing this is the start of a bear market, others believe markets are oversold and equities now look at their most compelling in years. There are valid arguments on both sides, but some seem more right than others.
Demand for liquid funds with a mandate to invest in derivative strategies appears insatiable in Europe, with net fund flows having exceeded €7bn each month since February. And a convincing majority of fund buyers wants to continue adding to their absolute return holdings, according to EIE’s latest data. But do these so-called alternative Ucits funds actually live up to their task of delivering uncorrelated returns? Or are investors better off buying their illiquid and more expensive cousins, offshore hedge funds?
Despite the possibly devastating consequences of a Grexit on European equities, asset management companies’ confidence in the asset class remains at record levels, according to the latest EIE Fund Manager Sentiment survey.
Emerging market debt and high yield bonds, which have had some pretty high inflow volatility recently, are now firmly back in favour with European investors. By contrast, net inflows into investment grade bonds are slowing down.
The devaluation of the euro is regarded by many as a one-way street: if the US is a guide, then Europe’s QE 1 will be followed by QE 2 and QE 3 and if history is a guide, the devaluation may go on for many more months. So what should we do to prepare?
Volatility in frontier market equities has been quite extreme over the past couple of months, but to what extent has this turbulence affected investor sentiment?