Sat, Nov 29, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Greenwich Associates: European retail investors regaining appetite for risk

Monday, November 23, 2009
Opalesque Industry Updates - Intermediary distributors of investment funds in Europe say their retail clients have rediscovered an appetite for risk and are looking to boost returns with new investments in “high risk” equity products and fixed-income credit products. Conspicuously absent from this resurgent demand among retail clients, however, are hedge funds, which remain strongly in favor among institutional investors.

More than one-third of the leading 196 intermediary distributors interviewed by Greenwich Associates for its 2009 Intermediary Distribution Research Program say they expect to see significant asset growth in products such as emerging market equities, Asian equities and international equities in the coming year. Only 2-3% of distributors predict significant declines in these products.

“Our research shows how quickly investors have regained their risk appetite” says Greenwich Associates consultant Tobias Miarka. “Distributors of investment funds are indicating that, after a period of extreme risk aversion, their retail clients are looking to take advantage of what they see as a market bottom.”

On the fixed-income side, 31% of fund distributors expect to see significant asset growth in corporate bonds in the coming 12 months (with only 6% predicting significant declines) and 24% expect comparable growth in emerging market debt (with 4% expecting significant declines in assets). The same trends appear in distributors’ expectations for specialist funds. Thirty-one percent of European distributors expect to see a significant increase in assets invested in commodities funds, more than a quarter (26%) expect an increase in infrastructure funds and 22-23% expect significant increases in assets invested in agriculture, sustainable/“SRI,” or ecological/green funds. The share of distributors predicting significant asset declines for these products ranges from 2–5%. “It should be noted that even if these growth rates materialize, absolute levels of investments in these funds will remain modest relative to larger equity and fixed-income products,” says Greenwich Associates consultant Chris McNickle.

Meanwhile, a sizable share of the European intermediary distributors participating in the study expect to see significant asset declines in more conservative investment products. Almost a third (32%) predicts significant asset declines in money market funds and 27% expect significant reductions in government bonds.

Mixed Signals on Alternatives and Balanced Funds
While intermediary fund distributors in Europe are in agreement that retail investors will be shifting assets into higher-risk equity and fixed-income funds next year, distributors are divided in their predictions regarding alternative asset classes and balanced funds. For example, while 23% of distributors predict significant asset gains for “new style” balanced (i.e., multi-asset funds), 19% predict significant declines, and the research results show a similar split in expectations for traditional balanced funds, which typically offer fairly stable proportions of stocks and bonds. Balanced funds are most popular among French distributors, about a quarter of which expect to see significant asset growth in both traditional and new style balanced funds.

Distributors are also divided in their outlook on alternative investments, including hedge funds, private equity and real estate, both REITs and direct investments. “Despite these mixed signals, there has been a clear shift in investor attitude toward hedge funds,” says Greenwich Associates consultant Marc Haynes. “In 2008, 27% of European third-party fund distributors predicted significant asset growth in hedge funds for the coming year; 12 months later, only 11% predict such growth and 15% expect to see significant asset declines. This differs from institutional investors who expect hedge fund investments to continue to grow.” Corporate website: Source

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Unlucky Paulson & Co. rebrands $1.6bn Recovery Fund after 13% drop[more]

    From Businessweek.com: A maturing U.S. economic recovery is prompting Paulson & Co. to change course. The $19 billion hedge fund firm, led by billionaire John Paulson, told investors on a conference call this month that the Paulson Recovery Fund will be renamed Paulson Special Situations Fund on Jan

  2. Opalesque Roundtable: Islamic Finance races ahead with Sukuk, the first managed account platform, and foreign demand[more]

    Komfie Manalo, Opalesque Asia: A number of developments took place within Islamic finance in the past years, including the launch of a Islamic managed account platform and the further growth of the sukuk space that saw this instrument evolve from being a type of an ABS security that was rarely

  3. Fund Profile - A complex hedge fund strategy works for United Technologies[more]

    From Institutionalinvestor.com: Reports that portable alpha is dead have been greatly exaggerated, as Mark Twain might have phrased it. Another Connecticut Yankee, giant United Technologies Corp., is gearing up to grow its successful, nearly decade-long portable-alpha program. The UTC strategy took

  4. Opalesque Exclusive: The unintended consequences of Basel III[more]

    Benedicte Gravrand, Opalesque Geneva: Bijesh Amin, co-founder and managing director of Indus Valley Partners (IVP), a technology solutions and services firm focused on the alternative asset management industry, has recently observed

  5. Legal - Six years after AIG takeover, lawsuit reveals another potential buyer[more]

    From Institutional investor.com: When former Treasury secretary Henry (Hank) Paulson Jr. testified in a suit last month about the U.S. government takeover of American International Group, his words were — mostly — numbingly familiar. Explaining the “punitive” terms set for the September 2008 bailout