Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
The quarterly HSBC survey analyses the assets under management (AUM) and the views of 12 fund houses and their global money flows. The net money flow estimates are derived from movements in assets versus index movements in the equivalent class.
The 12 participating fund managers in the survey conducted in the first two weeks of August were AllianceBernstein, Allianz Global Investors, Baring Asset Management, Deutsche Asset Management, Fidelity Investment Management, Franklin Templeton Investments, HSBC Global Asset Management, Invesco Asset Management, Investec Asset Management, JF Asset Management, Schroders Investment Management and Societe Generale. HSBC distributes portfolios of these fund houses, which manage around $4.2 trillion in assets combined.
Many fund managers surveyed by HSBC have turned bearish on equities, with 44% taking an underweight stance in the third quarter compared with only 10% in the second quarter. Only 33% were neutral versus 60% previously; 22% were overweight versus 30% previously.
In contrast, 44% of the respondents were overweight on bonds in the third quarter versus 20% in the second quarter. No fund managers took an underweight view towards the sector, compared to 50% of fund managers who were underweight in the second quarter.
More specifically, when it comes to markets, 22% of the survey respondents were underweight on Asia-Pacific ex-Japan equities in the third quarter. This is a sharp contrast compared to zero underweights in the first quarter. Around 44% were overweight versus 56% previously.
One bright spot in Asia was the fund managersÆ outlook for Greater China shares, which remained generally positive, but nevertheless not as bullish as before. None of the respondents were underweight, which was also the case in the second quarter. The number of fund managers with an overweight view of the sector declined from 86% in the first quarter to 63%. Those who were neutral grew from 14% to 38%.
Fund managers remained relatively bullish on global emerging markets equities, with the number of managers with an overweight view up to 50% from 44%.
Bonnie Tse, HSBCÆs head of wealth management for personal financial services in Asia-Pacific, says the latest survey results show investors are still very much concerned over the warning signs of inflation and the economic slowdown in Asia.
ôInvestors continue to take conservative positions, moving away from volatile equity markets and finding a safe haven in bonds and cash,ö she says.
At the end of the second quarter, the 12 fund houses covered in the survey reported $4.2 trillion in total assets, making up around 17% of the estimated total global AUM of $24.8 trillion.
The total estimated net fund outflow of the survey respondents during the second quarter reached $28.5 billion, down 0.67% compared with the net fund outflow in the first quarter.
The estimated net outflow was mainly driven by an estimated $50 billion net outflow from equity funds. The net outflow could have been worse if not for the net inflows of $15 billion and $11 billion into balanced funds and money funds, respectively.
Regulators keep their eyes open on tightening insurance industry by introducing more detailed risk management requirements, which could bring pressure on smaller players.
China and India are more obvious choices for AustralianSuper to consider in Asia Pacific, but the super fund currently lacks the expertise and prefers to stick to the US and Europe.
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