Poor performances for DGF and MSFI during a challenging Q4
CAMRADATA reveals poor performances for DGF and MSFI funds during a challenging Q4 for investors…
CAMRADATA, a leading provider of data and analysis for institutional investors, has just published two of its investment reports for Q4 2018, which chart the performance of investments and asset managers across Diversified Growth Funds (DGF) and Multi Sector Fixed Income (MSFI).
The research revealed that whilst diversified growth funds are designed to deliver growth-driven return across a broad spectrum of market conditions, in Q4 2018 it was hard to locate sources of growth and hard to find sufficient refuge. Performance suffered as a result.
For fixed income investment, global liquidity tightening (as the Federal Reserve, European Central Bank and Bank of England unwind their long-running asset purchase programmes), in combination with a weakening outlook for the global economy, presented difficult questions around how to manage strategy.
Sean Thompson, Managing Director, CAMRADATA said, “Concerns over trade and economic growth presented a challenging final quarter for investors. This left many seeking to rebalance portfolios towards lower risk assets. However, global liquidity tightening is the order of the day and this presents headaches for investors considering an increase in their bond allocations.
“These turbulent conditions provide both a test and an opportunity for diversified growth funds. Furthermore, rising interest rates present a challenge to fixed income managers that they have not had to contend with in a number of years. Our reports highlight poor performances for both at the end of 2018.”
Q4 highlights for Diversified Growth Funds and Multi Sector Fixed Income:
Diversified Growth Funds
- This was a period of poor performance for DGF funds. Less than 2% of funds in the CAMRADATA DGF universe experienced a break-even or positive return over the quarter. This is a striking deterioration compared with the past two quarters, when more than 70% of funds in each period achieved break-even or positive return.
- Against this backdrop, the DGF universe experienced net outflows of more than £5bn over the quarter, the fifth consecutive quarter in which this segment has seen negative asset flows.
- Since Q3 2018, AuM has fallen by more than £14bn, meaning that assets in the DGF CAMRADATA universe are now £24bn below their peak achieved at the end of Q4 2017.
- Baillie Gifford & Co. achieved the largest asset inflows with £360m in Q4 2018. PineBridge was the runner up with £238m of inflows, followed by LGT Vestra, Fulcrum Asset Management and DWS.
Multi Sector Fixed Income (MSFI)
- MSFI absolute return funds experienced a marked deterioration in performance during Q4 2018, with less than 30% of products in the CAMRADATA universe achieving break-even or positive return. This compares poorly with the preceding quarter, when 82% of these products achieved break-even or better.
- Over a three-year timeframe, however, the performance numbers are more encouraging, with 93% of products meeting this performance target.
- The MSFI universe experienced fund outflows of £4.2bn during Q4, the second successive quarter that it has witnessed negative asset flows. Some asset managers remained attractive to investors despite this negative trend.
- Natixis Investment Managers achieved the largest asset inflows over the quarter, totalling just over £1,000 million in converted sterling, with T Rowe Price, M&G Investments, PGIM Fixed Income and Loomis Sayles also experiencing net inflows.
Sean Thompson concludes, “Investors can keep abreast of issues that are likely to affect the markets using CAMRADATA Live. This tool monitors the strategies of asset managers, keeping investors up to date on what’s happening across hundreds of asset classes and helping ensure they make informed investment decisions.”