Bangkok--8 Oct--HSBC
Views of global fund managers on equities and bonds in the fourth quarter of 2012 remain unchanged compared to 3Q12 with 50% and 60% of respondents in HSBC’s latest Fund Managers’ survey holding a neutral outlook. Two-fifth (40%) and one-fifth (20%) of fund managers held overweight views towards equities and bonds respectively while 30% held underweight views on cash.
Eric Fu, HSBC’s Head of Wealth Development, Hong Kong, Retail Banking and Wealth Management, said: “The survey shows that global fund managers remain neutral towards equities and bonds, reflecting the nervousness in the market on growth prospects. However, with recent monetary easing actions by central banks, including the third round of quantitative easing in the US, bonds remain attractive particularly for the yield- seeking investors. Having said that, equities have long-term appeal underscored by the attractive dividend yield pickup over bonds.”
In 4Q12, less fund managers are bullish about North American (60% vs 70% in 3Q12), European (ex UK) (40% vs 50%), Asia Pacific ex Japan (33% vs 40%) and Greater China equities (43% vs 50%). No fund managers held underweight views on Greater China or Indian equity funds.
Within bonds, the majority of fund managers turned bullish towards Asian bonds, with 75% and 63% of fund managers holding overweight views on Asian USD and Asian local currency bonds, respectively (vs 38% and 25% in 3Q 2012). The survey also shows that high yield bonds (90% overweight) and global emerging market bonds (70% overweight) continue to be favoured by most fund managers.
Fu added: “For medium to long term investors, there are potential long term opportunities. Resilient fundamentals and potential monetary easing in the region make Asian income focused assets appealing to investors.
“While safe haven bonds have become more expensive, corporate and emerging market debt fundamentals remain solid. With a strong desire for yield amidst the continued low interest rate environment, fund managers are also looking for opportunities in high yield and global emerging market bonds.”
Asset class allocation strategy
Underweight Neutral Overweight
4Q 2012 3Q 2012 4Q 2012 3Q 2012 4Q 2012 3Q 2012
Equities 10% 10% 50% 50% 40% 40%
- North America 30% 30% 10% 0% 60% 70%
- Europe (ex. UK) 30% 20% 30% 30% 40% 50%
- Asia Pacific ex. Japan 11% 0% 56% 60% 33% 40%
- Greater China 0% 0% 57% 50% 43% 50%
- India 0% 38% 83% 63% 17% 0%
Bonds 20% 30% 60% 60% 20% 10%
- Asian USD 0% 13% 25% 50% 75% 38%
- Asian local currency 13% 13% 25% 63% 63% 25%
- Global emerging markets 0% 10% 30% 40% 70% 50%
- High yield 0% 10% 10% 10% 90% 80%
Cash 30% 33% 60% 56% 10% 11%
2Q2012 global fund flows
Funds under management (FUM) across 13 of the world’s leading fund management houses1 polled reached US$4.14 trillion2 at the end of 2Q 2012, down by 3.3 per cent from the previous quarter, with equity funds being the major contributors (80%) to the drop.
The survey recorded a net outflow of USD34.2 billion for equity funds in 2Q 2012, the eighth consecutive quarter, as a result of the lingering concerns on European debt crisis and disappointing economic data. Bond funds recorded net minor inflow as a whole with high yield / EM bonds contributing the most amidst low interest rate environment.
Asset class End 2Q 2012 End 1Q 2012
Emerging markets/High yield bonds +2.0% +8.8%
Europe including UK equities +0.8% -0.7%
Asian bonds -0.5% -2.1%
Greater China equities -1.3% +1.0%
Emerging markets equities -1.3% +0.2%
North American equities -1.5% +0.9%
Japanequities -2.0% -1.5%
US bonds -2.3% -1.1%
Global equities -4.3% -4.3%
Global bonds -5.2% +8.7%
Asia-Pacific ex-Japan equities -6.6% -4.3%
Europe including UK bonds -7.9% -3.3%
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