CAMRADATA, a leading provider of data and analysis for institutional investors, has published its investment research reports for Q3 2017, charting the performance of investments and asset managers across six asset classes – Global Equity, UK Equity, Emerging Markets Equity, Diversified Growth Funds, Multi Sector Fixed Income and Emerging Markets Debt.
Over three years’ worth of data from CAMRADATA Live (its online manager research platform) at 30 September 2017 was analysed to produce the six reports and key investments trends emerged.
In Q3 2017, US dollar weakness, a pickup in commodity prices and continued momentum in the Chinese economy helped emerging market stocks lead the way in performance over the quarter, whilst the European markets enjoyed steady growth as economic data remained robust.
Global equities performed well in Q3 and stocks rose amid a brighter outlook for the global economy backed by better than expected corporate earnings, plus several key market indices reached record highs during the quarter.
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Sean Thompson, Managing Director, CAMRADATA said, “In the USA in February, May and September 2017, the S&P 500 reached all-time highs, breaking the records previously set. During Q3, corporate earnings continued to improve and the news that the economy grew at a healthy 3.1% in the second quarter (annualised) supported returns.
“In Europe, a stable global growth outlook helped UK equities over the period but uncertainties surrounding Brexit and a hawkish tone from the Bank of England meant returns lagged global equities. Eurozone stocks advanced over the quarter as key economic indicators continued to improve and diminishing political uncertainty comforted investors.
“Economic data in Europe remaining healthy as economic growth was confirmed at 2.3% in the second quarter (annualised) and many companies reported better than expected earnings growth,” adds Mr Thompson.
Assets under management (AuM), in these Global Equity products, total just under $720bn as at the end of Q3 2017, which is $39m less than it was at Q2 2017.
The Global Equity universe continued to see investors reducing their allocation in Q3 2017, which saw outflows total -$5.1m. This universe has not seen any positive inflows in 12 months. However, some managers have still managed to achieve inflows during Q3 2017 despite the overall loss.
T Rowe Price took the first spot in the asset manager inflows table seeing $1,455m added to their AuM, with Evermore Global Advisors coming in second place with $600m of inflows, followed by Sustainable Growth Advisors, Nordea Asset Management and Capital Group.
Q3 2017 saw over 98% of managers producing a breakeven or positive return, which follows the trend in returns from Q1 and Q2 2017 which reached 100% and 98% respectively. The lowest return produced is -5.12% and the best performing product achieved is 12.93%, giving a spread of 18.05% between the top and bottom performer in just three months.
In comparison, looking at the three-year period, just under 99% of managers achieved a breakeven or positive annualised return, with the range of annualised returns starting from -12.9% and the best performing product achieved 21.45%, giving a spread of 34.35% pa between the top and bottom performer.
Assets under management (AuM), in these UK Equity products, now total just over £150.87bn showing a £3.66bn decrease since Q2 2017. The asset class continued to see outflows this quarter with another £5.2bn having been withdrawn. In fact, taking into account all of the products the UK Equity asset class has seen outflows of assets in each of the past 12 quarters.
Although the UK Equity universe saw negative asset flows in Q3 2017, the range of quarterly returns saw just below 95% of products achieving a breakeven or positive. The lowest quarterly return produced is -4.47 % and the best performing product achieved 10.84%, giving a spread of over 15.3% between the top and bottom performer in just one quarter.
The range of annualised returns for the 3 years to 30 September 2017 saw 99% of products achieve a breakeven or positive return. The lowest annualised return for this period is -3.37% and the best performing product achieved 22.3%.
Emerging Market Equities
At the end of Q3 2017, assets under management (AuM), in these Emerging Market Equity products, total just over $572.6bn as at the end of Q3 2017. This is an increase of just over $41.5bn assets from Q2 2017.
In Q3 2017 nearly 100% of managers achieved positive returns in the Emerging Market Equity universe. The lowest return produced is -3.89% and the best performing product achieved 15.44%, giving a spread of over 19.33% between the top and bottom performer in just one quarter.
Moreover, when looking over a three-year period, nearly 99% of managers achieved a breakeven or positive return in this asset class. The lowest annualised return achieved was -13.83% and the highest was 16.75%, which highlights the importance of the asset manager selection, the style and the size cap decision process in this asset class.
Diversified Growth Funds
Assets under management have decreased by just under £1.2bn since Q2 2017 and now total £187.1bn as at 30th September 2017. For the first time in 3 years the DGF universe experienced net outflows of £9.5m in Q3 2017.
Q3 2017 continued to see an increase in positive performance outcomes within the DGF universe, with 89.8% of products achieving a breakeven or positive return. The lowest quarterly return produced is -1.06% and the best performing product achieved 5.43%, giving a spread of just over 6.49% pa between the top and bottom performer.
Looking at the three-year spread of annualised returns; all products achieved a breakeven or positive return. The lowest annualised return produced is 1.62% and the best performing product achieved 13.44%, giving a spread of around 11.82% pa between the top and bottom performer.
Multi Sector Fixed Income
The Assets under Management (‘AuM’) in the MSFI Absolute Return universe sits at just over £77bn as at 30th September 2017. This is an increase of assets by just over £3.6bn since Q2 2017.
In Q3 2017 MSFI Absolute Return products achieved positive inflows of just under £3bn across the universe. This was more than double from the previous quarter which saw just over £1.3bn of inflows.
Western Asset Management had the largest asset inflows totalling £681m, in converted sterling, during Q2 2017. They were followed by BlackRock, M&G Investments, Pictet Asset Management Ltd and Morgan Stanley Investment Management.
As in Q2 2017, Western Asset Management had the largest asset inflows, totalling £1,059m in Q3 2017 in converted sterling. They were followed by BlackRock, TCW, Brandywine Global Management, LLC and Pictet Asset Management Ltd.
In the MSFI market, just over 91% of products achieved a breakeven or positive return in Q3, up from 88% in Q2. Looking at the three-year spread of returns 97.5% of products achieved a breakeven or positive return, highlighting that the MSFI Absolute Return universe continues to provide positive outcomes.
Emerging Market Debt
The Assets under Management (‘AuM’) in the EMD universe sits at $268.8bn as at 30 September 2017. This means the EMD universe has seen its assets increased by almost $20.4bn since Q2 2017.
The EMD products continued to see net inflows of just under £12.3bn across the universe within Q3 2017. Franklin Templeton Investments had the largest asset inflows totalling $1.6bn during the quarter. They were followed by Ashmore Group, T Rowe Price Group, Inc., Neuberger Berman and BlackRock.
100% of products achieved a breakeven or positive return in the EMD universe this quarter, and just over 96% of products achieved a breakeven or positive return over a three-year period, proving that the Emerging Market Debt universe continues to provide positive returns.
The lowest return reached in Q3 2017 was 0.87% and the best performing product achieved 6.95%, giving a spread of just over 7.82% between the top and bottom performer.
The range of annualised returns for the 3 years to 30 September 2017 in USD EMD is -2.5% to 10.09%, giving a spread of 12.59% between the top and bottom performer.
Overall, EMD products in USD have overall been far less volatile in their distribution of returns than the MSCI EM U$ – Total Return Index over the last 3 years. For instance, the EMD Median has achieved monthly median returns in the range of -5% to 5%, whilst the benchmark has ranged from -8% to +10%.
Sean Thompson concluded, “Our latest quarterly investment report highlights a better than predicted picture of the global economy which prompted stocks to rise, global equities to perform well and several market indices reaching record highs.
“However, there continues to be political concerns in the USA, not least the situation in North Korea and the ongoing Brexit negotiations, which are still creating great uncertainty. These are likely to impact the stability of the markets over the coming months.
“It’s important for investors to keep abreast of what’s happening globally to ensure they make the right investment decisions. CAMRADATA Live is an invaluable tool for monitoring the strategies of asset managers, keeping investors up to date on what’s happening across hundreds of asset classes,” adds Mr Thompson.