Less risk by fund managers could be a sign they feel economic prospects are improving, it was claimed.
Fund managers trimmed the level of active risk they employed in relation to benchmarks across 12 asset classes in the last quarter of 2011, as measured by Camradata IQ, a database of investment performance.
For example, European Equity returns were up and risks were down with nearly 7% of the peer group outperforming the MSCI Europe benchmark. The median manager outperformed the index by 4.1 per cent (2.2 per cent last quarter) and the median risk was 7.1 per cent (8.8 per cent last quarter).
Steve Butler, managing director of Camradata, said: “Risk is always present in investment but our latest report indicates that a reduction in active risk could be a positive sign. This generally happens when managers are feeling confident that their approach will bring reward. It can be seen as a flag that conditions are viewed as a bit more promising.”
By contrast, European Fixed Income posted a marked increase in risk levels in comparison to the previous quarter, a knock-on effect of the European debt crisis. However, returns increased with the average manager outperforming by 8.1% from 5.2% last year.
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