Europe
If one were to judge the past 12 months by
looking at the manager sentiment on Europe
equity, you could be deceived into thinking
that the sector had, if not a particularly brilliant
time of it, at least not a terrible one. After all,
apart from a brief foray into positive territory in
April, managers have been consistently neutral
in their attitude. But the reality, of course, has
been an entirely different matter.
Throughout 2011, Europe was plagued by
first the sovereign debt crisis of the PIIGS, and
then the threat to the very survival of the euro.
But of course, the European economy has been
a story of two halves, and the strength of the
northern European states, particularly Norway,
Sweden, Germany and Switzerland have probably
saved sentiment on the equity from freefalling
into negative territory. Only time will tell
whether that can stay the same in the next 12
months.
Positive
Neutral
Negative
Positive
Neutral
Negative
The PA Manager Sentiment Survey is an overview of 23
of the biggest fund managers operating in the UK. Every
month, Skandia asks the managers what their forward
12-month outlook is on a series of asset classes and
sectors – they can answer positive, negative or neutral.
We consolidate all this information into a bespoke
database that shows how fund industry opinion changes
month by month – and we compare that to the monthly
discrete performance of the relevant index.
The bar charts show our sentiment number ranging
from +100 (all managers are bullish), through 0
(bulls and bears balance each other out) to -100 (all
managers are bearish). A score closer to zero generally
indicates a lack of willingness for managers to make
strong predictions. If the sentiment is -25 or lower,
then we count it as ‘bear’ and mark it red; if it is 25 or
higher then it counts as ‘bull’ and is coloured green. In
between, it is neutral and orange.
MANAGERS POLLED: Allianz Global Investors, Aviva Investors, Axa
Framlington, Barings, BlackRock, F&C, Fidelity, GLG, Henderson, HSBC,
Ignis, Invesco Perpetual, Investec, JPMorgan, Kames Capital, Martin
Currie, Newton, Old Mutual, Pictet, Schroders, SIG, Threadneedle
(NB not all managers give a view in all sectors)
100
50
0
-50
-100
Jan ’11
100
50
0
-50
-100
Jan ’11
EUROPE EQUITY
STERLING PERFORMANCE vs EURO
14
7
0
-7
-14
Dec ’11
14
7
0
-7
-14
Dec ’11
FTSE World Eur ex UK (discrete) %
£ performance vs € %
Asia Pacific
Sentiment on both Japan
and Asia Pacific ex
Japan equities bounced
back into positive territory
in December, but
their benchmark indices
slid 1.9% and 4.61%.
Despite an earthquake,
tsunami and nuclear scare – all of
which had the potential to derail the national
economy – manager sentiment towards Japan
held up well for much of 2011, and the sector
was Bull of the Month three times in the first
half of the year. Those who favour investment
in Japan often talk up the value of the country’s
multinational corporations, some of the best in
the world. They also argue that, as Japan has
suffered a ‘lost’ 20 years of economic stagnation,
this too presents some ideal buying
opportunities.
However, the FTSE Japan Index highlights
the struggle the economy is still facing. It has
lost 8.58% value on a one-year view, while
Positive
Neutral
Negative
100
50
0
-50
-100
Jan ’11
STERLING PERFORMANCE vs YEN
MANAGER SENTIMENT SURVEY
over three years it has managed to add only a
feeble 10.19%.
Meanwhile, Asia Pacific equity remained
favoured by managers up until November,
when it pulled back to a neutral position for
the first time in three years. The region has
weathered the economic crisis better than most
– the Australian government, for example, is
rare among developed countries in that currently
has a budget surplus to play with (albeit
a tight one). But the sector is dominated by
China, and any problems it may encounter in
2012 will surely seriously dent manager sentiment
in the coming 12 months.
JANUARY 2012 [www.portfolio-adviser.com] PORTFOLIO ADVISER
US
-14
Dec ’11
£ performance vs ¥ %
US equity ended 2011 with its highest sentiment
score since April 2009, however US
smaller companies hit an 18-month low, falling
back to -6.
The painfully slow US economic recovery
was hampered for much of 2011 by the political
paralysis that hit Washington following the
sweeping victory of the Republicans in
Congress and many gubernatorial contests in
November 2010. A battle of wills ensued
between the White House and the House of
Representatives over how to tackle the country’s
massive debt burden, taxation and the best
plan for jobs growth. 2012, of course, will be
dominated by the long drawn-out process of
the Presidential election, which will no doubt
see the economy remain a political football.
But with Europe still sorting itself out and
nervousness about the sustainability of emerging
market equity growth, for many UK investors
US equity remains the most attractive
haven outside the domestic economy. And in a
year of market turmoil, the S&P 500 and Russell
2000 were the only indices to end with gains
rather than losses, so the world’s largest economy
remains a force to be reckoned with.
14
7
0
-7
Positive
Neutral
Negative
Positive
Neutral
Negative
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
100
50
0
-50
-100
Jan ’11
100
50
0
-50
-100
Jan ’11
JAPAN EQUITY
ASIA PACIFIC EX JAPAN EQUITY
STERLING PERFORMANCE vs US DOLLAR
US EQUITY
US SMALLER COMPANIES EQUITY
14
7
0
-7
-14
Dec ’11
14
7
0
-7
-14
Dec ’11
14
7
0
-7
-14
Dec ’11
14
7
0
-7
-14
Dec ’11
14
7
0
-7
-14
Dec ’11
FTSE Japan (discrete) %
FTSE Wld AP ex Jap (discrete) %
£ performance vs $ %
S&P 500 (discrete) %
Russell 2000 (discrete) %
27
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