In the first half of 2016, investors in Europe have poured in $5.7bn (€5.1bn) into smart beta funds as market capitalisation index trackers saw outflows over the period, according to Morningstar data analysed by ETF provider WisdomTree Europe. Brexit could be one of the reasons for the switch.
With global growth slowing and developed-market government bonds at a record low, fixed income managers are focusing on opportunities in spread sectors.
The past 12 months haven’t been a great time for equity investors. Only US equities delivered a positive return during the period, albeit a modest one. A year ago, few European investors were betting on this asset class to do well though.
This year has marked a turnaround in the fortunes of emerging markets, driven by an increase in global risk appetite, a hike in commodity prices and an easing of concerns over the slowdown in the Chinese economy.
Retail investors in China may be allowed to invest in mutual fund-of-funds later this year after the release of a consultation paper from the China Securities Regulatory Commission (CSRC).
The cheaper a fund is, the better the chance it outperforms its peer group, a study by Morningstar has shown.
Morningstar selects its top 10 newcomers in the Europe ex UK equity sector, according to senior analyst Muna Abu-Habsa. Many of the newcomers are small in size, with four funds with less than $40m. Investors should also be aware that a one-year time frame is a short period to assess fund performance.
Returns from mainland funds might look attractive to overseas investors, but be aware of the differences in product design and investment style, said Morningstar China director of manager research, Rachel Wang.
UK Sipp provider AJ Bell has created three risk-rated portfolios designed to deliver returns in a low return, low interest rate and low inflation world, explains investment director Russ Mould.
Multi asset funds lost money for the second consecutive month in February, for the first time since March 2009. Funds that invest mainly in bonds have been bleeding most of late, while medium-risk funds actually saw net inflows.
European investors did themselves a disservice in February. They sold out of pretty much all asset classes when markets hit (in some cases) multi-year lows before recovering their losses in the past couple of weeks. The outflows mainly hit active funds, as ETFs saw modest net inflows.
Outflows from open-ended funds in Europe continued apace in February, the latest data from Morningstar reveals.
