Fund Buyer Index

Latest Research

Quarter 1 - 2016

As a one-off, we asked a carefully selected subset of top fund selectors (40 people from 13 countries) to give their forwardlooking investment intentions on different types of sector funds.

The bars on the right show the percentage of respondents who expect to buy, hold, sell or not use the various strategies; the number in the column on the right is AUM in all funds of that theme domiciled in Europe ex UK.

We’ve listed it in order of how much money is in each strategy in Europe, with Healthcare the biggest (€19.4bn in AUM).

Aside from private equity, a high level (65-80%) of respondents use these funds.

Perhaps surprisingly, the highest numbers of buyers are in energy and financial services funds.

Biotechnology is in a churn with roughly one in five looking to either buy or sell.

Overall, all the largest-themed fund sectors, except for private equity, are enjoying a healthy level of demand.

The AUM numbers are from Morningstar – they are an aggregation of the assets of every sector fund domiciled in Europe.

Sector funds: buying/selling intentions:

It seems that fund selectors have radically changed their assumptions about asset class behaviour over the past year.

In the year up to mid-2015, the attitudes of fund selectors to GEM and US equities were highly correlated.

European equities and developed market high yield were similarly correlated to each other.

And the two pairs of correlated asset classes mentioned above were inversely correlated to each other until half-way through last year.

In other words, when fund selectors turned against US/GEM equities, they would become more positive towards Europe equities/high yield and vice versa.

That medium-term relationship started changing sharply around a year ago. Now sentiment towards GEM equities is strongly correlated with high yield and inversely correlated with US and Europe equities – a complete turnaround.

It’s clear from this that habits of portfolio construction and assumptions about the behaviour of these asset classes have changed across Europe.

Do you recognise these changes in your attitudes to these asset classes? If you either disagree or agree with these patterns, please email us with your thoughts. Send your messages to dylan.emery@lastwordmedia.com

Rolling four-quarter sentiment correlations vs GEM equities

Rolling four-quarter sentiment correlations vs European equities

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