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Manager Intelligence and Market Trends
bfinance’s quarterly report in August 2020: read the team’s latest insights on institutional investor activity, risk appetite, market developments and asset manager performance across all major asset classes.
IN THIS PAPER
Although managers boosted equity exposure in Q2, the Q1 spike in the bfinance Risk Aversion Index has not substantially softened in Q2, with a range of indicators illustrating the ongoing uncertainty (implied volatilities, gold prices, CDX etc).
On the back of a tumultuous first half, investors have been seeking to dissect their performance – and that of their external asset managers – through the crisis. One key issue in focus: how does portfolio diversification hold up when risk exposures such as factor intensity suddenly increase?
Strategically, many investors are in “wait and see” mode. Yet the first half of 2020 has proven to be a remarkably active period for new manager selection activity: 55% of all manager searches launched by bfinance clients during the last twelve months have been initiated in the first half of this year.
For equity manager performance, growth is virtually the only game in town. Equity growth managers outperformed the MSCI World index by more than 10% in Q2 - extending their outperformance to more than 20% for the year to date. Quality managers underperformed by nearly 3% in Q2, while more significant underperformance was felt among strategies with a focus on low volatility (-10%), income (-7%) and value (-4%).
The second quarter proved to be a more favourable climate for active Investment Grade Credit managers: 75% of those in the US outperformed the market, as did 77% in Europe. Yet High Yield managers struggled to beat their benchmarks.
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Each quarter, bfinance publishes information on investor activity, key market trends and manager performance. A 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.
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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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