During the previous Expert Investor Belgium in January this year, only 38% of delegates preferred large 
caps within European equities. Last week, six in 10 attendants said large caps are the area of their choice within the asset class. Interestingly, a change in the opposite direction has taken place with regard to US equities. In January, Belgian fund selectors had a clear preference for large caps. Now, the proponents of large caps are balanced out by those of smaller companies.
Short (of) opportunities
The shifting preferences of Belgian fund selectors might be the consequence of an ever more demanding investment environment, where almost all assets have now started looking expensive. In the US, valuations have been compelling for a while, though asset prices there are being supported by the economic recovery.
Fund selector preferences in January 2014
Fund selector preferences in September 2014
“Lots of flows have gone to Europe in the past months, and mutual funds have become reasonably crowded on Europe. These are reasons to stay away from the asset class,” said Kevin Franklin from Blackrock, one of the speakers at the conference. Franklin sees investors searching for yield drifting between different markets. “This is actually the biggest opportunity I see too,” the long/short equity manager said. “You will continue to see a lot of divergence between country outcomes, which are not driven by much. At the end of the day the global economy will be the underlying driver of all stock markets.”
Alternative appetite
Some 30% of delegates said they will increase their allocation to alternative equities Franklin’s asset class in order to adjust their portfolio to some downside risks and possibly to profit from Franklin’s opportunity scenario, while none will decrease their exposure. The increased appetite for alternatives is in line with fund selector views in Milan and Stockholm, which were gauged around the same time, although fund selectors there had an even bigger appetite for alternative equity funds.
Click here to see a slideshow of photos taken at Expert Investor Belgium.
Platinum members can additionally view a full breakdown of the event voting data here.
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