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Manager Intelligence and Market Trends
bfinance’s quarterly report in August 2018: read the team’s latest insights on institutional investor activity, risk appetite, market developments and asset manager performance across all major asset classes.
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IN THIS PAPER
An end to bullishness. After five increasingly confident quarters up to December 2017, the first quarter saw a significant decline in risk appetite, indicated by the bfinance Risk Aversion index. Wariness has persisted through the second quarter, although multi-asset managers appear to be remaining overweight growth assets.
Manager searches surge.The volume of new mandates from bfinance clients was 39% higher for the twelve months to June 30th 2018 than the prior year. Emerging markets (equity and debt), private debt, real assets and hedge funds are currently among the most popular destinations for capital.
A difficult quarter for active management. Managers across various sub-sectors have struggled to outperform benchmarks in 2018, although the medians mask considerable dispersion. The average active global equity manager has underperformed the MSCI Global by nearly 1% over the quarter to June 30th and 0.7% year to date.
Emerging markets give investors a rough ride. In an immensely challenging period for emerging market stocks and currencies, active equity and bond managers have suffered along with the markets.
Risk mitigation in focus. Recent bfinance client activity reveals a notable increase in demand for fund-of-hedge funds, real asset debt, small cap equity, listed real assets and high yield debt.
New appetite. Recent bfinance client activity reveals a notable increase in demand for fund-of-hedge funds, real asset debt, small cap equity, listed real assets and high yield debt.
Each quarter, bfinance publishes information on investor activity, key market trends and manager performance. Our quarterly snapshot of the key developments within equity, fixed income and alternative investments, including analysis of which asset manager groups performed well and which didn't.
It has been a year of two halves from a risk appetite perspective. 2017 H2 saw market participants in a bullish mood, with risk aversion well under its ten-year average.
Indeed, the five quarters to December 30th 2017 were each marked by successive declines in the bfinance Risk Aversion Index - a robust indicator of investor skittishness through recent years.
2018 H1, on the other hand, has brought a significant shift in sentiment. The heightened wariness has rolled on through the second quarter, although – unlike in Q1 – Risk Aversion was slightly under the ten-year average.
Amid this change in investment climate, it is interesting to note that multi-asset funds are remaining overweight equity. Indeed, the reduction in risk asset exposure in Q1 has been partly reversed in Q2.
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This commentary is for institutional investors classified as Professional Clients as per FCA handbook rules COBS 3.5R. It does not constitute investment research, a financial promotion or a recommendation of any instrument, strategy or provider. The accuracy of information obtained from third parties has not been independently verified. Opinions not guarantees: the findings and opinions expressed herein are the intellectual property of bfinance and are subject to change; they are not intended to convey any guarantees as to the future performance of the investment products, asset classes, or capital markets discussed. The value of investments can go down as well as up.
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