MANAGER SENTIMENT SURVEY
BRIC leads the pack
The volatile state of the global economy in 2011 was reflected in the managers’
sentiments – almost every month the Bull of the Month title changed hands. BRIC
equity was again the strongest performer, heading six of the 12 surveys during the
year. More surprising perhaps was that Japan equity was one of the top performers
Despite the fragility of
the UK economy
UK
throughout 2011, and
the threat of a return to
recession in 2012, UK
equity, smaller companies
equity and corporate
bonds proved
resilient in sentiment
terms. In six of the 12
surveys of 2011, one of these three sectors
managed to achieve the highest score, even
though in three of those instances the Bull
position was shared with another sector. UK
equity managed the feat three times, UK smaller
companies twice, while corporate bonds
Positive
Neutral
Negative
Positive
Neutral
Negative
Positive
Neutral
Negative
100
50
0
-50
-100
Jan ’11
100
50
0
-50
-100
Jan ’11
100
50
0
-50
-100
Jan ’11
UK GOVERNMENT BONDS
-14
Dec ’11
Emerging markets
14
7
0
-7
In a year that saw the Bull of the Month mantle swap
between sectors seemingly on a monthly basis (there
were only two instances in which one particular sector
managed to hold the position for consecutive months),
BRIC EQUITY
14
BRIC equity was the
best performer, having
the highest sentiment
7 score for six months,
although for one of
0 those it shared the
crown with UK smaller
-7 companies equity.
However, the man-
-14 agers’ confidence in
Dec ’11 the sector belied the
EMERGING MARKET EQUITY
14
recent poor performance
of the benchmark
index, which fell in
7 value by 18.22% on a
one-year view – more
0 than other sector
benchmark. This is in
-7 stark contrast to the
ten-year figure, which
-14 saw an impressive
Dec ’11 357.39% growth.
Citi UK Govt Bond Idx (discrete) %
MSCI BRIC (discrete) %
MSCI Emg Markets (discrete) %
Positive
Neutral
Negative
100
50
0
-50
UK EQUITY
-100
-14
Jan ’11
Dec ’11
ended the year on a high, rising 15 points to 48
to top the last survey of the year.
Managers may believe UK corporates will
be in a better position come December 2012,
but their outlook on UK government bonds is
much bleaker. That sector has not budged from
Positive
Neutral
Negative
100
50
0
-50
-100
Jan ’11
UK CORPORATE BONDS
Global
In association with
-100
-14
Jan ’11
Dec ’11
the Bear of the Month position for two-and-ahalf
years.
A look at the UK property benchmark index
shows how the sector flatlined throughout
2011. Not only has the index hardly budged,
but sentiment too showed little movement.
-100
-14
Jan ’11
Dec ’11
Investors in Western government bonds will no doubt be glad to see the
back of 2011, while those investing in global property may be feeling
nervous about what 2012 will hold in store for them. As we reported in
the sentiment survey in September, a number of property markets are
starting to look overheated, and the coming 12 months could prove a
difficult time for the sector. Except for a brief moment of optimism in
the early part of 2011, managers have maintained a neutral position on
global property.
The story was similar
for international
100
GLOBAL PROPERTY
14
bonds. What has most
likely rescued the
50
7
sector from falling into
negative numbers over
0
0
the past 12 months is
the healthier state of
-50
-7
emerging market bonds -100
-14
and treasuries.
Jan ’11
Dec ’11
26 PORTFOLIO ADVISER [www.portfolio-adviser.com] JANUARY 2012
14
7
0
-7
14
7
0
-7
-14
Dec ’11
FTSE All-Share (discrete) %
Citi UK Corp Bond Idx (discrete) %
PA Manager Sentiment Survey
Comparing the 12-month forward
outlook of 23 global fund groups
with current discrete monthly
index returns
Positive
Neutral
Negative
Positive
Neutral
Negative
Positive
Neutral
Negative
Positive
Neutral
Negative
100
50
0
-50
100
50
0
-50
-100
Jan ’11
100
50
0
-50
UK SMALLER COS EQUITY
UK PROPERTY
INTERNATIONAL BONDS
14
7
0
-7
14
7
0
-7
-14
Dec ’11
14
7
0
-7
FTSE Small Cap (discrete) %
FE UK Property (discrete) %
Citi Wld Govt Bond Idx (discrete) %
Glbl Property Secs (discrete) %
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