European investors are more uncertain about their macroeconomic outlook than ever before. In a year’s time, the share of fund buyers with an uncertain macroeconomic outlook has doubled to 60% according to Expert Investor data.
Fund buyers expect returns from their equity portfolio to be significantly lower over the next five years. However, they still expect equities to outperform bonds by a considerable margin.
The only certainty for Blackrock in today’s highly uncertain world is that central banks around the world will remain dovish. In Europe, they will even print more money.
A majority of investors in every European country expect a diversified bond portfolio to return less than 2% annually, over the next five years.
In 2015, net sales of regulated funds in Asia-Pacific for the first time outpaced sales in Europe and the Americas, according to data from the Investment Company Institute. Most of the sales growth came from money market funds.
ECB president Mario Draghi conspicuously avoided the B-word when he held a speech in Portugal last week. This may well be because he has yet to find an answer to the problems the vote has thrown up with regards to the execution of the central bank’s asset purchase programme.
High-yield bond volatility has increased markedly over the past two years, which is partly a reflection of mounting macroeconomic uncertainty. But the unprecedented pace at which money is flowing in and out of the asset class suggests there is something more to it.
As recently as April, high yield bonds registered the strongest net inflows since July 2013, the month after the taper tantrum sell-off. But fortunes for the asset class reversed sharply in May, according to Morningstar’s latest fund flows figures.
The three largest multi-strategy funds for sale in Europe have fared better than most other absolute return funds since the UK’s shock vote to leave the EU. However, the Standard Life GARS fund continues to underperform its peers on a longer-term basis.
The day after Roy Hodgson showed David Cameron a thing or two about how to resign rapidly when things have gone pear-shaped, the markets rowed back a little on their own quick reaction to an unexpected defeat.
European investors are sitting on large cash piles, and are waiting for volatility to ease a bit before hunting for opportunities.
Markets were stunned into action on Friday morning after the UK voted narrowly to leave the European Union. Sterling slumped to its lowest level versus the dollar since 1985, safe haven assets jumped and the Nikkei fell almost 8%, while the FTSE opened 6.7% lower.
