MANAGER SENTIMENT SURVEY
Great expectations
Sentiment towards the overwhelming majority of the equity sectors continues
to strengthen – the notable exception being Japan. The US is back in positive
territory and even Europe, which has failed to excite in 2009, has inched closer
to gaining the thumbs up. But on the index front, the story is less encouraging
Manager sentiment
towards the UK surged
in November, leaping a
solid 26 points to 64,
its highest level in over
five years. It is interesting
that managers
should take such a
UK
strong position on this
sector. Of all the major
developed global economies, it is the UK that
continues to struggle with recession. But with
an election due within the next six months – in
which all likelihood the incumbent Labour
government will be replaced by the first
Conservative administration for 13 years – there
Positive
Neutral
Negative
Positive
Neutral
Negative
Positive
Neutral
Negative
100
50
0
-50
-100
Dec ’08
100
50
0
-50
-100
Dec ’08
100
50
0
-50
-100
Dec ’08
UK GOVERNMENT BONDS
-16
-32
Nov ’09
Emerging markets
32
16
0
Another month, and another impressive performance
from the two emerging market indicators. BRIC climbed
11 points to wrestle the Bull of the Month title from
Asia Pacific ex Japan. It was also the only equity sector
BRIC EQUITY
32
to see its index rise, but
only by the most slender
of margins (0.19%).
16 It is interesting to
compare the similarities
0 between the sentiment
numbers of the BRIC
-16 countries and the
broader EM indices.
-32 There are substantial
Nov ’09 differences between
EMERGING MARKET EQUITY
32
the performance of the
BRICs and the rest of
EM – and there is also a
16 big divergence between
the BRICs themselves.
0 It is worth asking how
much longer those four
-16 countries should be
-32
kept together as a useful
benchmark for all the
Nov ’09 emerging world.
Citi UK Govt Bond Idx (discrete) %
MSCI BRIC (discrete) %
MSCI Emg Markets (discrete) %
Positive
Neutral
Negative
100
50
0
-50
UK EQUITY
-100
-32
Dec ’08
Nov ’09
is due to be a major shift in economic policy,
and managers may feel that this can only boost
the country’s prospects.
Property is up again in this survey in sentiment
terms, rising to 17, while the benchmark
is up 2.11%. Commercial property in particular
Positive
Neutral
Negative
100
50
0
-50
-100
Dec ’08
UK CORPORATE BONDS
Global
In association with
-100
-32
Dec ’08
Nov ’09
is starting to attract investors back to the fold;
in October, Investment Management Association
statistics showed that retail funds attracted their
highest monthly sales since May 2007. UK government
bonds continue to drag, remaining
Bear of the Month for the past four months.
Despite the Global Property Securities benchmark losing 3.99%, sentiment
continues to head in the right direction and, at 22 points, is tantalisingly
close to achieving an overall positive score. Only one manager
remains negative on the sector now – compare this with only 12 months
ago, when 11 were downbeat on its prospects.
As with UK property, much of the activity in the property recovery can
be attributed to the attraction of the commercial arena. The sentiment on
the global outlook has
consistently been slightly
better than the UK,
100
GLOBAL PROPERTY
32
suggesting that local
investors are finding
50
16
more value in what is
happening overseas,
0
0
and are increasingly
seeing investing in the
-50
-16
sector as a good hedge -100
-32
against inflation.
Dec ’08
Nov ’09
26 PORTFOLIO ADVISER [www.portfolio-adviser.com] JANUARY 2010
32
16
0
-16
32
16
0
-16
-32
Nov ’09
FTSE All-Share (discrete) %
Citi UK Corp Bond Idx (discrete) %
PA Manager Sentiment Survey
Comparing the 12-month forward
outlook of 25 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
Dec ’08
100
50
0
-50
-100
Dec ’08
UK SMALLER COS EQUITY
UK PROPERTY
INTERNATIONAL BONDS
32
16
0
-16
32
16
0
-16
-32
Nov ’09
32
16
0
-16
-32
Nov ’09
FTSE Small Cap (discrete) %
FE UK Property (discrete) %
Citi Wld Govt Bond Idx (discrete) %
MSCI World Real Est (discrete) %
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