The geopolitical risks that dominated markets for much of 2019 faded in Q4, helping both global equity and corporate bond markets as investor sentiment improved, writes Sean Thompson.
2019 saw significant changes in asset classes being searched on by institutional investors. The first half of the year was very much dominated by global, US and European-focused asset classes, while the third quarter saw emerging market and Asian-focused asset classes piquing investors’ interest.
Then came Q4. There was a much bigger interest in UK and European-focused asset classes, perhaps led by the reduced near-term political uncertainty, especially after the landslide general election victory for the UK Conservative Party, better economic data coming out of Germany and the final acceptance that Brexit would now be delivered.
UK Government Debt saw the biggest increase in searches by institutional investors in Q4 when compared to the previous quarter. This interest in UK-focused funds seen within CAMRADATA Live in the last quarter is also supported by the record £1 billion monthly inflow to UK Equity funds in December, one-third of which took place in the two days immediately following the general election. This helped push the whole equity asset class into positive fund flow territory for the year*.
That said, during the whole of 2019, institutional investors, especially pension schemes, continued to search on asset classes like Global Equity, Global Broad Bond, Global Diversified Growth and UK Property. Whilst these asset classes may have topped 2019 search activity, there were still many other asset classes that institutional investors researched, monitored and indeed appointed mandates in (see tables).
Asset managers seeing significant search activity in Q4 2019 included Fulcrum Asset Management LLP, Unigestion SA, Kames Capital and Aberdeen Standard Investments, who each topped their respective manager AuM peer groups.
2019 proved to be a positive year for many, even though at times it was invariably difficult to forecast – and whilst some may have not performed as well, it is clear from the amount of activity in CAMRADATA Live, the demand for investment performance and risk analysis has grown as institutional investors have to address the impact of the tougher rules on investment governance being adopted.
*Source: Calastone Fund Flow Index 2019
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Sean Thompson is Managing Director at CAMRADATA, the owner of Funds Europe. All figures are for three months to December 31, 2019 unless otherwise stated.
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