Invest
‘Dramatic’ shift occurring in investor equity appetites
Investors are turning away from US equity managers and towards emerging market focused managers, representing a “dramatic” shift in appetite, an investment consultant has said.
‘Dramatic’ shift occurring in investor equity appetites
Investors are turning away from US equity managers and towards emerging market focused managers, representing a “dramatic” shift in appetite, an investment consultant has said.
New bfinance data has revealed that more than one-quarter (28 per cent) of all new equity manager selection projects in the last year have been for emerging markets, with “Global Emerging Market” managers the most popular. However, “Emerging Asia” also received significant attention.
“This is a stark contrast with the previous year, when global equity mandates made up almost 40 per cent of the total number of new equity mandates (now 24 per cent) and the US dominated the regional picture,” bfinance said.
Noting that emerging market and Asia-focused equity managers have “been a high priority among pension funds and investors”, the bfinance report argued that the return of investor interest in emerging markets is “proving to be the most significant allocation trend of 2017”.
The fact that 28 per cent of all selection projects were for emerging markets reflects a growth in interest of more than 100 per cent.
Commenting on the figures, bfinance senior director and head of equity, Justin Preston said bfinance clients’ move towards emerging markets, Asia and Japan “has really been significant”.
A recent Nest Egg poll revealed that readers are most interested in learning about international equities as an asset class, with 24.5 per cent selecting this option. This was followed by ETFs (19.9 per cent of respondents), fixed income (15.9 per cent) and Australian equities (14.6 per cent).
Nest Egg readers were least interested in learning alternatives (13.9 per cent) and property (11.3 per cent).
Will the real active managers please stand up?
In a complementary report, Mr Preston said recent years have seen "fundamental changes" in how equity managers are viewed by investors and consultants.
He explained: "Investors have been increasingly vocal in recent years with demands for ‘real’ active managers and refusal to ‘pay for beta dressed as alpha’ – an appetite which has driven the increasing popularity of ‘unconstrained’ or ‘benchmark-agnostic’ strategies.
"There is also no doubting the instinctive appeal of attractive, comprehensible graphs that appear to reveal what managers are up to and may even, at the extreme, present a case for considering cheaper systematic forms of investment. It’s a tantalising prospect."
However, the question is how helpful those metrics really are in selecting managers that will actually outperform going forward, he contended, explaining that certain benchmarks like active share numbers aren't "hugely meaningful" without deeper understanding of the manager's approach.
In fact: "The now-conventional wisdom that managers with higher active share, lower turnover and higher concentration will tend to do better is flawed at best and misleading at worst."
Mr Preston's argument follows similar calls from Hyperion Asset Management's Tim Samway for investors to drop the short-term attitudes.
The managing director said investing is more than a game of buy and sell, but that many investors "feel like they need to be doing something".
Noting that compounding interest is a wonderful thing, Mr Samway told Nest Egg: "Investment really is holding onto an investment that you think is good and that you've determined is good and allowing that compound effect within that business to work."
Mr Samway said investors are increasingly demanding superior returns over all periods as a result of more benchmarking and this attitude is encouraged by regular reports on the performance of fund managers over monthly, quarterly or yearly periods.
Because of this, fund managers may be called "bad dog" if they fail to produce acceptable monthly or yearly returns.
The final group impacted by short-termism is managing directors who may have their jobs in jeopardy if they fail to turn the business around within one or two years, he concluded.
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
Property
What younger Australians are getting wrong about home loans
As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes. ...Read more
Property
More than 1 in 3 Aussie properties are cheaper to buy than rent
Having a mortgage is even more likely to be cheaper than renting than it was pre-pandemic, new research has revealed. ...Read more
Property
How will the moratorium on evictions impact landlords and tenants?
The NSW government has announced a 60-day moratorium on evictions, with landlords gifted incentives to reduce the burden on COVID-19-affected tenants. ...Read more
Property
Young renters cry out against ‘lack of respect’ in rental market
Young Australians have expressed dismay over the perceived discrimination within the rental market as the wealth divide forces them into long-term renting. ...Read more
Property
Note investing: A way into the property market for younger Australians?
As the traditional route into the housing market becomes more difficult, could unorthodox alternatives like note investing bridge the gap? ...Read more
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
Property
What younger Australians are getting wrong about home loans
As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes. ...Read more
Property
More than 1 in 3 Aussie properties are cheaper to buy than rent
Having a mortgage is even more likely to be cheaper than renting than it was pre-pandemic, new research has revealed. ...Read more
Property
How will the moratorium on evictions impact landlords and tenants?
The NSW government has announced a 60-day moratorium on evictions, with landlords gifted incentives to reduce the burden on COVID-19-affected tenants. ...Read more
Property
Young renters cry out against ‘lack of respect’ in rental market
Young Australians have expressed dismay over the perceived discrimination within the rental market as the wealth divide forces them into long-term renting. ...Read more
Property
Note investing: A way into the property market for younger Australians?
As the traditional route into the housing market becomes more difficult, could unorthodox alternatives like note investing bridge the gap? ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
