That means it is left to the likes of Baillie Gifford and Liontrust to make their presence felt in Table 3. The former features in four different categories, while Liontrust tops both the UK equity and mixed investment sectors – two of the areas typically most prized by advisers.
What next for investors?
This time last year, our survey discussed the difficulties facing investors at a time when both equities and bonds looked fully valued. The stock market sell-off at the end of 2018 may have created some value for equity investors, but indices subsequently rebounded to new highs by the end of April.
Add to the mix renewed fears over global growth – which have pushed down developed market government bond yields once again, further limiting the opportunities in fixed income – and it is no surprise many investors are still puzzling over what to do next.
If there has been a consensus trade this year, it has been emerging market equities. Emerging market shares have not risen nearly as much as their developed peers over the past few years, and the sight of the US Federal Reserve easing back on its rate hiking plans has further strengthened backers’ case. But concerns over the health of the global economy, and the burgeoning trade war between the US and China, mean even this shift has its detractors.
A nervousness is apparent in fund flow data; the market rebound has not been accompanied by an uptick in interest in retail funds, according to IA data. As of March, the association’s fund universe had suffered outflows for a record six months in a row, although the rate of these redemptions has eased off in 2019.
Ritu Vohora, investment director at M&G, says of the outlook: “The biggest headwind facing investors is that policymakers make a mistake. Market commentators are perhaps too complacent in their belief that US interest rates will stabilise, or even fall, from current levels.
“For the moment, investor sentiment remains cautious, with record equity outflows being recorded. Should those outflows change to inflows, this could add further momentum to the rally. However, valuations are now back to normal levels, so upside from earnings will be critical to drive stock markets higher from here.”
For advisers, there are pockets of good news. One is that the traditional 60/40 portfolio has continued to perform well during the recent volatility. Global growth concerns have seen bonds join equities in moving higher this year, but the sell-off showed that sovereign debt can still function as a safe haven in times of nervousness – providing, that is, this nervousness does not stem from the prospect of higher interest rates.
