- CAMRADATA Investment data highlights the latest global investment trends
8 June 2017 – CAMRADATA, a leading provider of data and analysis for institutional investors, has published its investment research report for Q1 2017, charting the performance of investments and asset managers across six asset classes including Global Equity, Emerging Markets Equity, UK Equity, Diversified Growth Funds, Multi Sector Fixed Income and Emerging Markets Debt.
Over three years’ worth of data from CAMRADATA Live (its online data platform) at 31 March 2017 was analysed to produce the reports and some key investments trends emerged in Q1.
Overall, the global equity markets enjoyed a good start to the year, extending last year’s robust performance as investors shrugged off political uncertainty and focused on positive economic data.
Macroeconomic data coming out of the US continued to be supportive of a growing economy. US equities performed well as the S&P 500 increased a further 6.1% over the quarter, and the Federal Reserve increased base interest rates for the second consecutive quarter by a further 0.25% at its March meeting.
There was a similar growth story in the UK. The FTSE All-Share continued to march upwards and gained a further 4.0% over the quarter amid growth prospects in the global economy. The Bank of England upgraded its 2017 GDP growth projection from 1.4% to 2.0% due to stronger than expected consumer spending following the EU referendum result.
In the Euro market, the period started on a weak note, with negative returns in January, the stock markets picked up as the quarter progressed. The MSCI European Economic and Monetary Union index ended the quarter up 7.2%. Economic data coming out of the Eurozone was largely positive. The European Central Bank updated its 2017 and 2018 growth and inflation forecasts but pledged to keep stimulus in place until next year.
Commenting on the data, Sean Thompson, Managing Director, CAMRADATA said, “A lack of follow-through on protectionist trade policy from the Trump administration supported risk appetite in the emerging markets and the rejection of anti-euro politicians in recent European elections receded fears of political instability and an imminent breakup of the Eurozone, with Eurozone equities delivering robust gains as a result.
“Article 50 was triggered at the end of the period, signalling the formal start of the UK’s process of leaving the EU and an extraordinary period of uncertainty for the UK economy. We expect the impact of this will be in evidence in Q2’s data, as well any fallout from the UK’s general election on 8th June.”
Thompson also points out that Asia ex-Japan equities had a strong first quarter. And in China, stocks gained strongly and had their best first quarter in over 10 years, fuelled by solid industrial production figures and continued strength in the property market.
Diversified Growth Funds
Assets under management (AuM) in Diversified Growth Funds (DGF) have increased by nearly £5.5bn since Q4 2016 and now total just under £176bn as at 31 March 2017.
DGF products saw slightly less quarterly inflows than the last quarter, standing at £2.7bn across the universe. In fact, it is the lowest amount of inflows seen in DGFs during a quarter since Q3 2014.
Q1 2017 continued to see an increase in positive performance outcomes within the DGF universe, with 97% of products achieving a break even or positive return. The lowest quarterly return produced is -1.17% and the best performing product achieved 6.43%, giving a spread of just over 7.6% between the top and bottom performer.
Looking at the three-year spread of annualised returns; all bar one product achieved a break even or positive return. The lowest annualised return produced is -1.35% and the best performing product achieved 16.15%, giving a spread of around 17.85%pa between the top and bottom performer.
Assets under management (AuM), in these UK Equity products, now total £165.77bn, providing a £2.41bn increase since Q4 2016. However, the asset class continued to see outflows with £3.18bn having been withdrawn during the quarter. In fact, the last time the UK Equity universe saw a positive net inflow was in Q1 2014.
Although the UK Equity universe saw negative asset flows in Q1 2017, the range of quarterly returns saw 99% of products achieving a break even or positive. The lowest quarterly return produced is -0.65% and the best performing product achieved 13.48%, giving a spread of over 14.13% between the top and bottom performer in just one quarter.
The range of annualised returns for the 3 years to 31 March 2017 saw all products achieve a break even or positive return. The lowest annualised return for this period is 1.57% and the best performing product achieved 13.77%.
Assets under management (AuM), in these Global Equity products, total $553bn as at the end of Q1 2017, which is nearly $8bn less than it was at Q4 2016.
The Global Equity universe continued to see outflows during Q1, making it the 7th quarter in a row that investors have reduced their allocation in Global Equities. That said some managers have seen inflows this quarter.
Goldman Sachs Asset Management International took the first spot in the asset manager inflows table seeing $1.70bn added to their AuM. Causeway Capital Management LLC came in second place with $1.17bn of inflows followed by Hexavest Inc.; Tweedy, Browne Company LLC and AB (AllianceBernstein).
Q1 2017 saw a significant increase in the number of managers producing a break even or positive return with nearly 100% of products achieving this. The lowest return produced is -6.7% and the best performing product achieved is 18.78%.
In comparison, looking at the three-year period, just over 98% of managers achieved a break even or positive annualised return, with the range of annualised returns starting from -13.11% and the best performing product achieved 15.1%.
Emerging Market Equities
In Q1 2017 all managers achieved positive returns in the Emerging Market Equity universe, which contrasts with Q4 2016 which witnessed a largely negative range of returns.
Moreover, when looking over a three-year period, 90% of managers achieved a break even or positive return in this asset class. The lowest annualised return achieved was -4.31% and the highest was 19.33%, which highlights the importance of the asset manager selection, the style and the size cap decision process in this asset class.
Multi Sector Fixed Income
The Multi Sector Fixed Income (MSFI) market continued to post positive results. The Assets under Management (‘AuM’) in the MSFI Absolute Return universe sits at just over £75.6bn as at 31 March 2017.
In Q1 2017 MSFI Absolute Return products achieved positive inflows of £1.5bn across the universe. This was a slight reduction from the previous quarter which saw £2.3bn of inflows.
TCW had the largest asset inflows totalling £897m, in converted sterling, during Q1 2017. TCW was followed by Insight Investment Management (Global) Limited; BlackRock; Payden&Rygel and Morgan Stanley Investment Management.
In the MSFI market, over 92% of products achieved a break even or positive return in the first quarter. Whilst 95% of products achieved a break even or positive return over a three-year period, highlighting that the MSFI Absolute Return universe continues to provide positive outcomes
Emerging Market Debt
The Emerging Market Debt products saw net inflows of just over £1bn across the universe, which made Q1 2017 the first quarter in seven quarters to experience positive flows.
Neuberger Berman had the largest asset inflows totalling $750m during the quarter. They were followed by GAM, Goldman Sachs Asset Management International; Franklin Templeton Investments and Amundi.
Nearly 100% of products achieved a break even or positive return in the EMD universe this quarter, a dramatic difference from the 5% in Q4 2016. Whereas just under 73% of products achieved a break even or positive return over a three-year period.
The lowest return reached in Q1 2017 was -0.63% and the best performing product achieved 9.02%, giving a spread of just over 8.39% between the top and bottom performer.
The range of annualised returns for the 3 years to 31 March 2017 in USD EMD is -4.5% to 9.04%, giving a spread of 13.54% between the top and bottom performer, which highlights the importance of the asset manager selection process in this asset class.
Sean Thompson concluded, “Our quarterly investment reports are essential reading for those looking for critical data and analysis on the latest trends. This year has started off with slightly less volatility than had been anticipated in both the USA and Eurozone, which has been reflected in the largely positive economic data in these markets.
“However, with Theresa May triggering Article 50 on 29th March the markets may become increasingly turbulent as the results of the negotiations become clearer. Investors and asset managers can stay ahead and monitor the markets through CAMRADATA Live to ensure they make the most informed investment decisions, in what is likely to be a tricky period ahead, particularly in the Eurozone markets.”
Current cryptocurrencies unlikely to last, Bank of England governor says
By David Milliken
LONDON (Reuters) – No existing cryptocurrency has a structure that is likely to allow it to work as a means of payment over the long term, Bank of England Governor Andrew Bailey told an online forum hosted by the Davos-based World Economic Forum on Monday.
“Have we landed on what I would call the design, governance and arrangements for what I might call a lasting digital currency? No, I don’t think we’re there yet, honestly. I don’t think cryptocurrencies as originally formulated are it,” he said.
Bitcoin, the best-known cryptocurrency, hit a record high of $42,000 on Jan. 8 and sank as low as $28,800 last week, far greater volatility than is found with normal currencies.
“The whole question of people having assurance that their payments will be made in something with stable value … ultimately links bank to what we call fiat currency, which has a link to the state,” Bailey said.
The BoE, like the European Central Bank, is looking at the feasibility of issuing its own digital currency. This would allow people to make sterling electronic payments without involving banks, as is currently possible with banknotes, and would in theory help avoid the volatility that renders bitcoin impractical for commerce.
Bailey said the appropriate level of privacy for digital currencies was likely to be hotly debated and was potentially underrated as a challenge in setting one up.
“This is a big one that is coming on to the landscape, the whole question of a privacy standard for transactions made in any form of digital currency, and where the public interest lies,” he said.
(Reporting by David Milliken, editing by Tom Wilson and Alistair Smout)
EU sustainable investment rules need better corporate data – banking report
By Simon Jessop and Kate Abnett
LONDON (Reuters) – European Union rules aimed at defining sustainable investments should help reduce “greenwashing” by businesses, but better quality corporate data is needed to ensure they work effectively, a banking report said on Tuesday.
The sustainable finance rules will classify investments that can be marketed as sustainable, a move aimed at steering much-needed cash into low-carbon projects to deliver the bloc’s climate goals.
From January to August 2020, 26 of the region’s biggest lenders tested the EU framework across a range of core banking processes, including retail banking, trade finance and lending to smaller companies.
As the main providers of finance to companies across the EU, the ability of the banking system to track and report on whether corporate activities are sustainable or not could prove crucial in assessing the rules’ success or otherwise.
The lenders broadly welcomed the regulations as they seek to align their businesses with the transition to a low-carbon economy, the report by the United Nations Environment Programme Finance Initiative and the European Banking Federation found.
However, they also raised a number of issues, many of which were data-related and could require a phasing in of reporting requirements.
While many large companies are already required to disclose certain environmental and social information by law, the bulk of smaller and mid-sized banking clients are not, hampering banks’ assessment of their alignment with the rules.
Concerns over the quality, detail and standardisation of data is also an issue when looking at banks’ lending overseas, something that would be made more complex as other regions launch their own regulations.
The banks who tested the EU rules called on regulators to seek global alignment of regulations, and for better tools to manage data from clients, such as a centralised EU database.
While under no compulsion to lend to activities that can be classed as sustainable, banks see sustainable finance as a growth area that is likely to take on more importance in coming years should policymakers tighten environmental legislation.
With more investors globally looking to become shareholders of companies with a good record on managing environmental risk, banks are also likely to look to reduce their exposure to environmentally or socially harmful activities over time.
The European Commission is expected to finish the section of the rules covering climate change in the coming months, before they take effect in 2022.
(Reporting by Simon Jessop and Kate Abnett; Editing by Pravin Char)
Bitcoin, crypto inflows hit record last week – CoinShares
By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – Investment flows into cryptocurrency funds and products hit a record $1.31 billion last week after a few weeks of small outflows, as investors took advantage of the decline in bitcoin and other digital asset prices, according to the latest data on Monday from asset manager CoinShares.
Total assets under management (AUM) in the industry slipped to $29.7 billion as of Jan. 22, from an all-time peak of $34.4 billion on Jan. 8. At the end of 2019, the total AUM was just $2 billion.
Grayscale, the world’s largest digital currency manager, posted assets under management of $24 billion last week, down from $28.2 billion on Jan. 8. CoinShares, the second largest crypto fund, managed assets of $2.9 billion in the latest week, also down from $3.4 billion on Jan. 8.
“We believe investors have been very price conscious this year due to the speed at which prices in bitcoin achieved new highs,” said James Butterfill, investment strategist, at CoinShares.
“The recent price weakness, prompted by recent comments from Secretary of the U.S. Treasury Janet Yellen and the unfounded concerns of a double spend, now look to have been a buying opportunity with inflows breaking all-time weekly inflows,” he added.
Bitcoin dropped to a low of $28,800 on Friday, after scaling an all-time peak of $42,000 on Jan.8. It was last down 0.5% at $32,124.
About 97% of inflows went to bitcoin, the data showed, with Ethereum, the second largest cryptocurrency, posting inflows of $34 million last week.
So far this year, volumes in bitcoin have been considerably higher, trading an average of $12.3 billion per day, compared to $2.2 billion in 2020.
Glassnode, which provides insight on blockchain data, said in a report on Monday that bitcoin’s net unrealized profit/loss (NUPL) was getting close to exceeding the “belief” range and moving into the “euphoria” range.
Previously, when NUPL entered this range, it signaled a global top in bitcoin’s price.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Richard Chang)
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