European investors have been dismissing US equities as too expensive for a couple of years. But as the S&P 500 continues to outperform other equity markets, appetite for the asset class is again on the rise.
James Clunie is short the US. While it is a simple trade, the manager of the Jupiter Absolute Return Fund said the combination of short term political risk and seasonality would suggest such a position makes sense.
Investors have jumped into emerging markets for the wrong reasons, according to Hermes Investment Management’s Gary Greenberg, and with the strong possibility of a Federal Reserve rate hike, he predicts it is only a matter of time until they realise they have had their dessert before the main meal.
Concern over credit quality and liquidity as well as transparency issues are barriers to investing in China fixed income and equities, the managers said.
Even though a growing group of asset management firms are warming to emerging markets, Gary Reynolds, CIO at UK-based wealth and asset management firm Courtiers, remains bearish on the region and believes the US is the most attractive opportunity.
Prolonged political uncertainty and flaws in the institutional framework have kept eurozone equity premium risk at its highest level since the ‘09 global financial and ‘11 eurozone crises, according to new data by NN Investment Partners.
South Korea is one of the most attractive regions in Asia in terms of dividend growth potential, said Henderson Asian Dividend Income Fund co-manager Sat Duhra.
While bonds have become the new stocks for many investors, ‘Taper Tantrum II’ remains a real threat for asset markets this autumn, warned Bank of America Merrill Lynch ahead of Fed chair Janet Yellen’s Jackson Hole speech today.
Seeing a thematic rotation below markets’ calm surface, NN Investment Partners is increasing its exposure to cyclical stocks by upgrading industrials and materials and downgrading healthcare.
Pictet Asset Management has weighted its multi-asset portfolios more towards cyclical equities as a respite in dollar strengthening supports earnings.
The firm’s multi-asset group is upping exposure to emerging Asia equities at the expense of their UK counterparts.
The popularity of bond funds was reinforced by the Brexit vote. While all fixed income asset classes saw net inflows, investors especially flocked to emerging market debt in July, according to fund flows data from Morningstar.
