When it comes to any kind of sentiment index, the answer is “Yes”, as the view of most people when asked about a forward-looking view is always couched in terms of their opinion on the same thing on the day they are asked.
In terms of asset allocation, the latest fund manager views, taken from Skandia’s monthly Indicator research, shows pretty much what you would expect right now – sentiment is positive towards UK, US, APac ex Japan, BRIC and emerging market equities; they are more positive on UK corporate bonds than gilts; and playing the middle ground, if slightly negative, on UK and global property.
Correlation of 1
But perhaps the most positive noise comes from views on the improving economic scene.
Looking at the intermediaries’ views, Barings’ latest survey (its quarterly Investment Barometer) shows an ever-increasing optimism in how they see the investment backdrop.
Concern over the risk of a double-dip recession has decreased by almost two-thirds, with the number of advisers citing it as a “major global macroeconomic challenge” at just 10%. This was the view of 28% of intermediaries in the last quarter of last year.
Greece has been off the front pages for a few weeks as its most recent €28bn bailout has been rubber-stamped, it is busy collecting unpaid taxes – €8bn so far – and even Germany has seemingly cemented its future in the euro with Angela Merkel saying she will do “everything she can” to keep the eurozone together.
Clients benefit
Both intermediaries (84%) and fund managers (41%) are outright pessimistic about Europe – despite what now looks like a one-off upturn in February according to fund managers [see April’s issue of Portfolio Adviser for a full analysis].
Emerging markets are winners on both the buy side and the sell side, with 94% of intermediaries telling Barings they favour these less developed countries for their investment exposure. The polar opposite is true of Japan, in that the majority of fund managers and fund buyers are not in favour.
While there is a great deal of talk of correlation among asset classes, it is also refreshing that there is a great deal of correlation in the views from both sides of the fence. Those investing on behalf of individual clients are telling the same story as those fund managers to whom they trust their money and it cannot be often, except in the very best of times, when there is such agreement.
