View more on these topics

Adviser Fund Index

Merrill Lynch global fund manager survey data for March indicated a sharp upturn in investor sentiment. The poll showed managers at their most bullish on the prospects for economic growth since December 2005.

The Merrill Lynch global growth indicator registered a reading of zero, signalling a balance between the numbers of optimistic and pessimistic respondents.

However, the increasingly upbeat mood is yet to translate into positive action. Equity allocations fell close to an all-time low in March while bond and cash weightings remain at elevated levels.

The Merrill Lynch risk and liquidity composite indicator also declined from 31 to 28, marking an end to a tentative pick-up in risk appetite that started last October.

Adviser Fund Index panellists are equally cautious despite positive news for equities in recent weeks. Bestinvest senior investment adviser Adrian Lowcock says stockmarket rallies in March were driven by sudden changes in sentiment rather than improving fundamentals.

On Monday, March 23, the S&P 500 posted its biggest one-day gain since last October as investors reacted positively to details of the American Treasury’s toxic asset plans.

Lowcock says: “We are still wary of any recoveries at the moment. Two weeks ago, market sentiment suggested that there was no hope left and that has flipped quite quickly.

“There are opportunities but we are dripfeeding money into the markets. Any rise could be short-lived – we need to see spreads come in and fundamentals dealt with before there can be a sustained recovery.”

Chartwell investment research manager James Davies is also circumspect.

He says: “The rally on March 23 was predominantly around financials. It looks like a bear market rally – the long-term direction of the stockmarkets still cannot be predicted with confidence.”

He adds that slowing Chinese GDP growth is an area of particular concern, with rising internal demand as yet una- ble to fully counterbalance falling exports.

Davies says Chartwell’s clients have increased their cash reserves although risk appetite is slowly returning. “Investors are starting to realise that cash is not providing anything and gilts are a return-free risk,” he says.

Davies says that corporate bonds have been the main recipient of client cash. He highlights Richard Woolnough’s M&G optimal income fund as an attractive buy. The £300m portfolio appears in all three AFI indices, with a total of 13 selections.

There is likely to be continued caution from panellists during the next AFI rebalancing on May 1. Equity allocations range from 47 per cent in the Cautious index to 85 per cent in the Aggressive benchmark while fixed-interest weightings are 7-39 per cent. Last November’s rebalancing saw a marked shift away from domestic exposure, with British equity allocations falling by 5-7 per cent.

Recommended

Twin trouble

Inflation and deflation are back on the agenda – this month, both at the same time. The prospect of different indices pointing in different ways will present novel and complex challenges for IFAs and consumers.

Is three a crowd?

The pension versus Isa debate has raged on and off for years. Les Cameron, head of technical at Prudential, asks if three’s a crowd.   I think the debate was arguably settled by pensions freedom when the biggest downside of pensions – limited access and poor death benefits – was fundamentally changed. Total access, albeit with […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com