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Manager Intelligence and Market Trends
bfinance’s quarterly report in November 2021: read the team’s latest insights on institutional investor activity, risk appetite, market developments and asset manager performance across all major asset classes.
IN THIS PAPER
As inflation surged, oil prices spiked and vaccine rollouts stalled, multi-asset managers held fast to their risk-on investment positioning—taking it to the limit—but their growing uncertainty is starting to show: according to bfinance’s risk appetite barometer, managers are now demonstrably more cautious in their approach than they were in Q2 2021.
With the threat of inflation looming, investors are already starting to reorient their portfolios to defend them from the risk of rising interest rates: the number of new manager searches conducted for bfinance clients rose by an astonishing 63% year-over-year for the 12 months ended 30 September.
Investors have remained focused on Private Markets, but they are now directing more of their attention and capital resources to Infrastructure (including niche Real Assets), Real Estate and Private Debt. Following a sharp recovery in fundraising over the past two quarters, Q3 saw an overall decline in resources allocated to Private Markets.
Demand for listed equities continued to be quite strong in Q3, but investors began to shift more of their resources to Global Emerging Markets (GEM) Equity searches: In the trailing 12 months to 30 September, Emerging Markets accounted for 28% of all new searches, up from 12% year-over-year.
A surge in client search activity under the broad heading of Diversified Strategies hinted at the rediscovery of hedge fund strategies as viable and important portfolio diversifiers— either as direct fund investments or tactical overlays. Investors focused on strategies that would allow them to reduce their portfolios’ overall equity sensitivity while maintaining liquidity and a reasonable expected return.
Fixed income investors also indicated keen interest in an array of higher-yielding, diversifying assets, such as Emerging Market debt, leveraged finance and structured credit strategies—including quantitative, multi-factorbased credit.
Each quarter, bfinance publishes information on investor activity, key market trends and manager performance. A quarterly snapshot of the key developments within equity, fixed income and alternative investments, including analysis of which asset manager groups performed well and which didn't.
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This commentary is for institutional investors classified as Professional Clients as per FCA handbook rules COBS 3.5R. It does not constitute investment research, a financial promotion or a recommendation of any instrument, strategy or provider. The accuracy of information obtained from third parties has not been independently verified. Opinions not guarantees: the findings and opinions expressed herein are the intellectual property of bfinance and are subject to change; they are not intended to convey any guarantees as to the future performance of the investment products, asset classes, or capital markets discussed. The value of investments can go down as well as up.
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