CAMRADATA, a leading provider of data and analysis for institutional investors, has published its latest investment research report for Q2 2018 on Multi Sector Fixed Income (MSFI absolute returns) – which charts the performance of investments and asset managers.
Over three years’ worth of data from CAMRADATA Live (its online manager research platform) at 30 June 2018 was analysed to produce the MSFI absolute return report and some key investments trends emerged for Q2.
Data on investor flows suggests MSFI absolute return funds are rising in popularity, as they offer a potential hedge against rising interest rates. This fund type enjoyed a net inflow of £3.5 billion Q2, according to the CAMRADATA universe, marking the ninth consecutive quarter this fund type has gained a net inflow.
Natixis Investment Managers had an especially good quarter in terms of fund raising. The firm gathered a net inflow of more than £1.5 billion for its MSFI absolute return funds in the period, putting it far ahead of BlackRock, the second most successful fund raiser in the quarter, with a net inflow of £399 million.
Mr Thompson says, “Rising interest rates are the enemy of fixed income returns. As rates go up, newly issued bonds become more valuable than the ones already held in the market. Investors are incentivised to sell their existing holdings and buy paper at the new, higher rates, causing the value of existing bond portfolios to fall.”
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“With the US Federal Reserve raising rates twice this year and indicating another rate rise may come in September, and the UK base rate climbing in August from 0.5% to 0.75%, our data suggests that investors are increasingly turning to MSFI absolute return to offset potential losses,” adds Mr Thompson.
Other key highlights from Q2’s Multi Sector Fixed Income report
- Natixis Investment Managers achieved the largest percentage growth, seeing its assets increase by 60.64% during Q2 2018, followed by Nomura, Cameron Hume, Payden & Rygel and Newton Investment Management.
- Western Asset had the highest market share in MSFI Absolute Return products with just over £10.79bn, in converted sterling, under management. The others in the Top 5 included BlackRock; Insight Investment Management (Global) Limited, M&G Investment and J.P. Morgan.
- Since Q1 2018 MSFI absolute return assets have decreased by just under £3.5bn
Sean Thompson concluded, “Performance of MSFI absolute return funds improved in Q2, compared to Q1 where less than half the products in the CAMRADATA universe achieved a break-even or positive return. This proportion rose to 59% in the last quarter. However, despite these gains, the total assets in the sector declined by £3.5 billion.
“With further interest rates a possibility in the USA and UK, the uncertainty around Brexit and the ongoing dispute over trade between America and China all influencing the markets the rest of 2018 could be extremely volatile.
“Our investment reports are essential reading for keeping abreast of what is happening in the MSFI market, providing detailed commentary and analysis on how the class has recently performed, as well as historically over the past three years.’
CAMRADATA has also published separate Q2 2018 reports on Diversified Growth Funds, Emerging Market Debt, Emerging Market Equity, Global Equity and UK Equity.
For more information or to receive any of the reports, please contact: [email protected]