Europe
Not much has changed in the managers’ attitude
to Europe, despite sentiment at its strongest
point since February 2008.
The fact the 12-month outlook has been relatively
flat is an interesting state of affairs considering
how volatile the underlying index has
been. It suggests not that the majority of fund
managers think the average European stock
will be flat next year but that instead the volatility
is so high they are not prepared to bet
either way right now.
Also, there is a differentiation among countries
and a differentiation among stocks that
will make a pan-European analysis less helpful
to an investor.
In the future, it seems more likely that you
will have to be more specific in your asset allocation
across both geography and also across
sector if you want to keep your European
equity performance competitive.
Positive
Neutral
Negative
Positive
Neutral
Negative
The PA Manager Sentiment Survey is an overview of 25
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: Aberdeen, Aegon, Allianz Global Investors, Aviva
Investors, Axa Framlington, Barings, BlackRock, Credit Suisse, F&C,
Fidelity, Gartmore, Henderson Global, HSBC, Ignis, Invesco Perpetual,
Investec, JPMorgan, M&G, Martin Currie, Newton, Old Mutual, Schroders,
SWIP, GLG, Threadneedle (NB not all managers give a view in all sectors)
100
50
0
-50
-100
Dec ’08
100
50
0
-50
-100
Dec ’08
EUROPE EQUITY
STERLING PERFORMANCE vs EURO
32
16
0
-16
-32
Nov ’09
32
16
0
-16
-32
Nov ’09
FTSE World Eur ex UK (discrete) %
£ performance vs € %
Asia Pacific
Japan was hit yet again
in the latest survey, with
sentiment dropping
back to its weakest position
in six months, while
the FTSE World Asia
Pacific ex Japan Index
lost 5.55% in value.
The index figures for Japan reflect the difficult
position the economy has found itself in
with investors over the past decade. On a
three-month view, it is the only sector in our
survey to have lost ground, if only by a slight -
0.15%. It is a similar picture on both three- and
ten-year performance (-14.09% and -23.27%
respectively). Even on a one- and five-year
basis when the index has actually made gains
(11.03% and 17.02%) the rises seem paltry compared
with most of the other indices. The FTSE
Small Cap, for instance, has made 52.2% over
12 months, while over five years the FTSE
World Europe ex UK has put on 59.99%.
What is notable is that the only other sector
Positive
Neutral
Negative
100
50
0
-50
-100
Dec ’08
STERLING PERFORMANCE vs YEN
MANAGER SENTIMENT SURVEY
that has struggled to make significant gains is
US equity. With the world’s two largest economies
performing so comparatively poorly, it
would seem to offer further evidence of the
shifting ground on which the global economic
order is currently situated.
Asia Pacific ex Japan also lost ground: sentiment
dropped slightly to 64 and the benchmark
index was down 4.3%.
Sterling gained 3.97% on its value against
the yen, while sentiment jumped a rigorous 27
points to 11, a score it has held for four of the
past five months.
JANUARY 2010 [www.portfolio-adviser.com] PORTFOLIO ADVISER
US
-32
Nov ’09
£ performance vs ¥ %
It was not only UK equity that managers have
taken more of a shine to in November (see
opposite page). After six months of maintaining
a neutral stance on the US, they have shifted
gear and now give the sector the thumbs
up. The S&P 500, however, headed in the
opposite direction, falling 4.8%.
The Russell 2000 performed even more
poorly, losing 9.56%, the biggest fall in a month
that saw all equity sectors bar one fall.
Sentiment on US small caps also continued to
flatline, barely shifting. It is interesting to compare
the performance of UK versus US small
caps in 2009.
The former has received much more support
from managers – this is likely to be
because they believe UK investors are no
doubt more comfortable investing in local
small caps than their US counterparts. If they
invest in the US at all, it is more likely to be in
the larger, well-known companies.
But in index terms, the Russell 2000 and
FTSE Small Caps have followed a similar
trajectory over the past 12 months, although
the former lags the latter siginificantly in
overall gain thanks to a huge slump in March.
32
16
0
-16
Positive
Neutral
Negative
Positive
Neutral
Negative
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
100
50
0
-50
-100
Dec ’08
100
50
0
-50
-100
Dec ’08
JAPAN EQUITY
ASIA PACIFIC EX JAPAN EQUITY
STERLING PERFORMANCE vs US DOLLAR
US EQUITY
US SMALLER COMPANIES EQUITY
32
16
0
-16
-32
Nov ’09
32
16
0
-16
-32
Nov ’09
32
16
0
-16
-32
Nov ’09
32
16
0
-16
-32
Nov ’09
32
16
0
-16
-32
Nov ’09
FTSE Japan (discrete) %
FTSE Wld AP ex Jap (discrete) %
£ performance vs $ %
S&P 500 (discrete) %
Russell 2000 (discrete) %
27
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