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Asset managers turn sour on Anglo-Saxon equities

During the week Theresa May formally triggered the start of the process that will take the UK out of the European Union, UK equity sentiment hit another record low. Return expectations for US equities also fell into negative territory.


PA Europe

Expert Investor already reported a few weeks ago that fund manager sentiment towards UK equities had reached a post-crisis low.

But in March, as Theresa May prepared to trigger Article 50 of the Lisbon Treaty, return expectations for the asset class declined further. For the first time ever, the majority of asset management companies taking part in the monthly Old Mutual Wealth fund manager sentiment indicator expect the FTSE 100 to post losses in excess of 5% over the next 12 months.

This bearish outlook follows a record-year for the index, which has risen 23.6% over the past year. That was partly thanks to the high share of foreign currency earnings of its constituents,  which enjoyed a windfall because of weak sterling, which is down 15% against the dollar and 9% against the euro over the past year.

UK equities were not the only asset class to see a deterioration of sentiment. US equity sentiment also turned sour, as the S&P 500 posted a negative return in March. It was the first time the index was in the red over a calendar month since Donald Trump’s election as US president in November.

Very much like their clients, fund buyers, asset management companies see much more perspective in Europe: though sentiment towards European equities declined slightly compared to the previous month, it’s still overwhelmingly positive (see chart).  According to Expert Investor data, appetite for European equities is now at a multi-year high: the majority of European fund buyers intend to increase their allocation to the asset class over the next 12 months, a recent Pan-European poll shows.

Here is a full overview of current fund manager sentiment for all asset classes