ARC: Wealth managers warming to equities but shun UK

While sentiment strongest on bonds, according to August investment manager survey


Investor sentiment towards equities turned more positive in August, but remained negative overall, according to Asset Risk Consultants (ARC)’s latest wealth manager sentiment survey.

The survey, which consults over 120 investment managers, found that while the UK is the least favoured region for equities, positive sentiment towards Japan increased the most over the month of August.

ARC research managing director Daniel Hurdley said: “Managers remain positive about their outlook on cash and bonds – with sentiment strongest on conventional and investment-grade bonds.

“In currencies, we have seen a large positive sentiment swing towards sterling and a large negative sentiment move on the US dollar year-on-year following the greenback’s strong appreciation in the first half of the year. Sentiment for commercial property remains negative.”

See also: Waverton: Why we have our lowest credit allocation since the global financial crisis

ARC collects the performance data of 350,000 investment portfolios from over 120 investment managers and places the data into four risk-rated buckets, known as the ARC indices.

The indices are made up of ARC Cautious (0-40% risk relative to equities), Balanced Asset (40-60%), Steady Growth (60-80%), and Equity Risk (80-110%).

ARC Indices August performance (%)

ARC IndicesRisk relative to equitiesGBPCharityUSDEURCHFCAD
ARC Cautious0-40%(0.1)(0.3)(0.6)(0.1)(0.2)0.2
ARC Balanced Asset40-60%(0.6)(0.8)(1.2)(0.4)(0.5)(0.1)
ARC Steady Growth60-80%(0.9)(1.1)(1.6)(0.7)(0.7)(0.3)
ARC Equity Risk80-110%(1.2)(1.4)(2.2)(1.0)(1.1)(0.6)
Source: Asset Risk Consultants

In August, all ARC indices fell as equity markets faltered. Hurdley said that markets were generally down over the month as “investors tried to second-guess the path of inflation and what it might mean for growth expectations and monetary policy”.

He added: “Bonds and hedge funds provided small returns in some sectors and except for oil and gas, other assets were lacklustre. As a result, it was a challenging month for investors and we are expecting negative results across most indices.”

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