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Manager Intelligence and Market Trends
bfinance’s quarterly report in February 2021: 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
As vaccine announcements lifted global markets, multi-asset managers increased their risk-asset positioning substantially. At the end of Q4, average equity exposure sat more than 4% above the long-term average.
With investors reorienting their portfolios to adapt to pandemic disruption and the lowerfor- even-longer rate environment, the number of new manager searches for bfinance clients rose by 34% versus 2019, while the volume of searches rose by 61%.
The increase in private markets search activity was particularly significant – rising from 41% to 51% of all new manager selection engagements. Yet industry-wide fundraising statistics for private markets told a different story, with a 20% year-on-year decline in capital entering closed-end funds.
The positive news of late-2020 catalysed a major factor rotation, including a long-overdue spell of outperformance for Value Equities. In Global Equities, asset managers with this style clawed back some of their relative underperformance through the year. Low- Volatility strategies ended the year with the weakest results in this asset class, trailing the MSCI World Index by 14% on average.
The upturn in sentiment left high-yield bond managers struggling to keep pace with index returns due to their strategies’ relatively low (opportunistic) exposure to CCC and lowerrated bonds. The same dynamics, however, boosted relative returns for investment-grade credit strategies.
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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