While nominal government bonds have witnessed strong outflows in recent months, inflation-linked bonds saw their highest monthly net inflows ever in October. Is this revival going to last?
Donald Trump’s election to the US presidency has triggered a shake-up of some parts of the equity markets. Is there more to come or have markets been relying too much on their crystal balls?
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.
Active managers are under fire from all sides. Regulators in the Nordic countries are leading the attack on closet trackers, and cheaper ETFs are eating market share. Fund selectors are looking on this favourably, though the asset management example is not followed by the wholesale sector in every European country.
People tend to dedicate most of their time to thinking through short-term solutions. While central banks saw QE as the easiest way to provide an imminent boost to their ailing economies, the current migration crisis is just as much a product of short-termist thinking.
Fund manager sentiment towards US equities had been negative for much of this year, with most asset management companies expecting a negative return over the next 12 months. But their outlook has brightened in October. Fund selectors have also started to be more constructive about the asset class.
Both fund selectors and fund managers have been bearish about US equities for quite a while, against a backdrop of the Fed planning to raise rates, possibly as early as this week. Now, Joachim Klement, chief investment officer of the Swiss fund consultancy Wellershoff & Partners, has provided a statistical back-up for their pessimism.
Financial consultancy Wellershoff & Partners recently analysed the return prospects for equity markets in Asia, Europe and the US, The outcome? Europe will outperform the US by about five times.
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?
European investors appear to have shrugged off their worries about a Grexit, with the Euro Stoxx 50 index up 2.4% on Monday. Indeed, the consensus that European stocks are the place to be has returned, also among the continent’s fund buyers.