When Donald Trump had just been elected to the US presidency, investors believed this would power US equities to new highs, while emerging market assets were expected to suffer. Four months into his presidency, expectations have changed radically.
European investors did in April what could, or perhaps even should, be expected from them: they sold US equities and bought the assets they said they would.
Bonds are no longer the portfolio diversifier they used to be. Therefore investors have to increase the number of building blocks in their portfolio.
Fund monitoring and deselection is an often overlooked area but a diligent approach can save time and have long-term benefits.
The surprise US election victory by Donald Trump has greatly increased uncertainty, yet asset prices are now back at similar levels as just a couple of days ago when a Clinton victory looked more likely.
Fund managers and fund selectors alike are haunted by the prospect of Trumpian rule, but still deem a Clinton victory more likely. However, it’s paramount investors don’t leave themselves too exposed to the consequences of a Trump triumph.
Belgian investors have been eagerly buying absolute return funds for a couple of years now, but their appetite has taken a hit as returns have been outright disappointing.
Investors have again started looking at increasing their exposure to commodities this year. However, the asset class has delivered mixed results so far.
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.
Worries about the consequences of Brexit have prompted many fund buyers to increase their allocation to cash and hedge their long positions. However, some put some risk back on at the end of last week as polls swinged back towards ‘Remain’.
European investors hoarded cash in May. As Brexit-induced uncertainty dominated markets, they poured a net €14bn into USD money market funds, according to Lipper fund flows data.
The decision by the ECB to include investment-grade corporate bonds in its asset purchasing programme has led to a spike in issuance and to yields edging even lower. While this market response was anticipated by the central bank, its stimulus efforts threaten the viability of the asset class in the longer term .
