- 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.”
What should I invest and How do I invest
By Imogen Clarke
With all the uncertainty that has arisen from 2020, with lockdown threatening businesses and the warning of a second wave, the topic of investments has taken on new meaning. Nowadays, more people are concerned with what makes for a good investment, or, if you’re a novice, how to best invest.
For instance, you might be unsure about the reliability of the company you’re looking to invest in, as well as the long-term prospects of your investment.
If you are unsure of your investments, then it is best to seek advice from financial experts like The Fry Group, who deal with tax, wealth and estate planning. They will see that you have a strong financial plan in place to help meet your objectives. They will develop a strategy that is built around your needs and asses any risks that could hinder your plans.
There are some things you’ll need to consider for your strategy; for instance, are you looking to make investments that are more of a risk and will take longer to come to fruition? Or, alternatively, are you wanting a faster approach that will result in a steady income? Whether or not you decide to play it safe all depends on your current financial situation and whether you have the means to take more of a risk. Do you have any other debts that take precedence over your future plans? Is your investment strategy realistic?
With the aid of a specialist – or investment manager – you can design an investment concept that works for you and your goals, and start to build a regular income from your investments. There are four main areas when it comes to assets (groups of investments) that you can consider:
Your investment manager will test the risks associated with your investment, and if it proves to be a positive investment choice, then you will be able to invest more over time.
So, how do you decide where to invest?
According to The Fry Group, ESG investing (Environmental, Social and Governance) is a good option for investors looking to support businesses that meet their similar ethics.
The main areas of ESG investing include:
- Environmental challenges (climate change, pollution, etc)
- Social issues (human rights, labour standards, child labour, etc)
- Governance considerations relating to company management
According to The Fry Group, “Many investors choose to consider ESG investing in order to ensure any investment decisions reflect personal beliefs and values. As a result, they choose to support companies who are making informed, responsible decisions which take into account their wider societal and global impact. In this way investors can achieve peace of mind that their investments are creating a positive effect.”
ESG investing is also more relevant now than ever, as more businesses are looking to present themselves as an environmentally conscious corporation that recognises the values of their consumers.
As The Fry Group puts it, “In the past, ESG investing has been seen as a niche investment approach, for a relatively small number of people with specific requirements. This has changed significantly in recent years, with a growing awareness of environmental issues such as climate change and an increasing understanding of social issues and human rights. As a result, many people are increasingly interested in reflecting their opinions and lifestyle choices through the way they invest.”
So, if you want your investments to pave the way for your personal values and reflect your own morals, then this is the route to go down. But how does it all work?
There are four areas of ESG investing:
- Responsible ownership and engagement: when companies are encouraged to make necessary improvements.
- Avoidance or negative screening: whereby businesses are ‘graded’ based on how ethical their business practices are and are avoided altogether if their methods are not approved.
- Positive screening strategies:when companies meet the ESG goals and are approved for investments.
- Impact investment strategies: the purpose of this is to use investment capital for positive social results such as renewable energy.
You will need to take into account your own personal objectives as well as the objectives that meet the ESG investment criteria. And, in terms of financial performance, ESG investing can be hugely beneficial. Those who opt for ESG investing perform a more in-depth analysis into long-term and future trends that affect industries, meaning that they are better prepared for changes in consumer values when they arise. And, with all the unpredictability that this year has offered us so far, isn’t it better to do the research and have all angles covered?
Investment Roundtable: Live with Jim Bianco
With Q4’s macro picture still looking grim amid the return of exponential coronavirus waves in Europe and the U.S. and Europe, we speak with veteran macroanalysis strategist Jim Bianco, CMT for a data-driven deep-dive into the global economy and financial markets on Sept. 7th at 12pm EDT.
- Learn from Jim’s unique combination of quantitative and qualitative analytics which provide an objective view on Rates, Currencies and Commodities to make smart investment decisions
- Identify important intermarket relationships he is watching with respect to Global Equities
- Roadmap a global outlook for 2021 in view of socio-political backdrop giving viewers key takeaways and intermarket perspectives on global investing.
Jim’s robust technical analysis includes a broad look at trends and themes in the markets, market internals, positioning such as the Commitment of Traders (COT), sentiment, and fund flows. Don’t miss out on this exclusive session from one of the investment world’s most insightful thought leaders.
Equity markets react to a rise in Covid-19 cases, uncertain Brexit talks and the upcoming US election
By Rupert Thompson, Chief Investment Officer at Kingswood
Equity markets had another choppy week, falling for most of it before recovering some of their losses on Friday and posting further gains this morning.
At their low point last week, global equities were down some 7% from their high in early September. US equities were down close to 10%, hurt by the large weighting to the tech giants which at least initially led the market decline.
The market correction is nothing out of the ordinary with 5-10% declines surprisingly common. Indeed, a set-back was arguably overdue given the size and speed of the market rebound from the low in March. As to the cause for the latest weakness, it is all too obvious – namely the second wave of infections being seen across the UK and much of Europe and the local lockdowns being imposed as a result.
These will inevitably take their toll on the economic recovery which was always set to slow significantly following an initial strong bounce. Indeed, business confidence fell back in September both here and in Europe with the declines led by the consumer-facing service sector. A further drop looks inevitable in October – fuelled no doubt in the UK by the prospect that the latest restrictions could be in place for as long as six months.
The job support package announced by Rishi Sunak did little to boost confidence. Its aim is to limit the surge in unemployment triggered by the end of the furlough scheme in October. However, the scheme is much less generous than the one it replaces as the government doesn’t want to continue subsidising jobs which are no longer viable longer term. A rise in the unemployment rate to 8% or so later this year still looks quite likely.
Aside from Covid, for the UK at least, there is of course another major source of uncertainty – namely Brexit. Another round of trade talks start this week and we are rapidly reaching crunch time with a deal needing to be largely finalised by the end of October.
Whether we end up with one or not is still far from clear. That said, the prospects for a deal maybe look rather better than they did a couple of weeks ago when the Government was busy tearing up parts of the Withdrawal Agreement. With significant Covid restrictions quite probably still in place in the new year and the Government already under attack for incompetence, it may not wish to take the flack for inflicting yet more chaos onto the economy.
Markets remain unimpressed. UK equities underperformed their global counterparts by a further 2.7% last week, bringing the cumulative underperformance to an impressive 24% so far this year. The UK weighting in the global equity index has now shrunk to all of 4.0%.
It is not only the UK which faces a few weeks of uncertainty. The US elections are on 3 November. We also have the first of three Presidential debates this Tuesday. Joe Biden’s lead looks far from unassailable, a close result could be contentious and control of Congress is also up for grabs.
All said and done, equity markets look set for a choppy few weeks. Further out, however, we remain more positive – not least because the focus should hopefully switch from the roll-out of new lockdowns to the roll-out of a vaccine.
Covid-19 can reboot belt and road initiative towards a sustainable future
A new CMS report reveals that Covid-19 has boosted Chinese enthusiasm for adopting the principles of BRI 2.0, leading to...
The (U)X Factor: The software bringing biometric payment cards to market
By Jonas Nilsson, Product Manager at Fingerprints With over 20 bank trials in progress and a second commercial roll-out imminent in...
Corporate treasuries under pressure need multi-banking trade finance technology
By Andrew Raymond, CEO, Bolero International The pressures on corporate treasuries in global trade have continued to mount since an...
How can financial services companies deliver great customer service and retain customer loyalty?
By Chris Angus, Senior Director, 8×8 The reality many banks are facing now is that given Amazon Prime can deliver...
Embracing digital automation without compromising on customer experience
By Mang-Git NG, CEO & Founder of Anvil Community banks have always prided themselves on their ability to serve their...
Two-thirds of finance professionals are now more efficient due to the Covid-19 crisis
The Covid-19 crisis is making a big impact on the efficiency of the UK’s finance departments, with 66% of financial...
Two thirds of people believe their work travel patterns have changed permanently
Alphabet research shows accelerating demand for mobility and EVs after lockdown Only 35% of people expect to return to normal...
TCI: A time of critical importance
By Fabrice Desnos, head of Northern Europe Region, Euler Hermes, the world’s leading trade credit insurer, outlines the importance of...
What should I invest and How do I invest
By Imogen Clarke With all the uncertainty that has arisen from 2020, with lockdown threatening businesses and the warning of...
Death of the workplace friendship: study shows how remote working is eroding our meaningful connections with colleagues
Employee experience platform Perkbox’s research on 1,296 employees and 300 business leaders reveal 65% think the ‘new way of working’...