Wed, Mar 4, 2015
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. Outlook - Philippe Jordan predicts 'alternative beta' to displace hedge funds, Stan Druckenmiller says Europe, Japan stocks will outpace U.S.[more]

    Philippe Jordan predicts 'alternative beta' to displace hedge funds From Investordaily.com.au: The disappointing performance of hedge funds in recent years is a result of "too much money chasing too little alpha", argues Capital Fund Management. Speaking to InvestorDaily, CFM partner Phi

  2. Investing - Seth Klarman of Baupost outlines his investment process as major stock market indices are stretched, Myriad hedge fund sold bulk of its Alibaba stake last year[more]

    Seth Klarman of Baupost outlines his investment process as major stock market indices are stretched From Valuewalk.com: As hedge fund manager Seth Klarman, leader of the $28 billion Baupost Group, reviews 2014 performance and considers investors gained near 7 percent on the year, he cons

  3. Investing - As rig count falls, hedge funds pile into long crude futures, Parus tactically shifts long/short exposure ratios, Mario Draghi outflanking Kuroda as bearish euro bets surge, Prime Capital’s 500.com bet derailed after 41% drop[more]

    As rig count falls, hedge funds pile into long crude futures From 247wallst.com: In the week ended February 27, the total number of rigs drilling for oil in the United States came in at 986, compared with 1,019 in the prior week and 1,430 a year ago. Including 281 other rigs mostly drill

  4. Opalesque Exclusive: SEC’s Mark J. Flannery warns hedge funds against valuation misconduct[more]

    Komfie Manalo, Opalesque Asia: Securities and Exchange Commission chief economist and director of Division of Economic and Risk Analysis (DERA) Mark J. Flannery has warned of the risks posed by market misconduct, particularly in the true valuation of assets by hedge fund managers. In his

  5. Dymon Asia's $3bn macro hedge fund lost 10.45% in January[more]

    From Reuters.com: Dymon Asia's $3.1 billion macro hedge fund lost 10.45 percent in January, performance data seen by Reuters showed, a month where many peers lost heavily after a surprise rise in the Swiss franc. Singapore-based Dymon, set up by Danny Yong, a former founding partner and chie