FSA‘s Fund Selector Asset Class Research involved a survey of fund buyers in the three Asian hubs in March, who were asked about forward-looking intentions on asset allocation. The time frame was the next 12 months.
Nearly half of respondents said that they would increase their allocation to China. This echoes a chorus of bullish views on Chinese economy in 2017 from Amundi, Deutsche AM, Fidelity and Matthews Asia.
Half of respondents also said they would increase their exposure to Asia-Pacific ex-Japan equities, but only 21% were keen on Japan itself. 71% said they would maintain their Japan exposure at the current level and 8% said they would decrease it.
Nearly 60% of the fund buyers polled indicated their intention to increase allocation to European equities in the next 12 months, while only 8% said they would reduce it.
On the other hand, a full 38% of respondents said they would reduce their allocation to US equities.
Pictet’s Luca Paolini recently urged investors to be cautious about overpriced US equities, while affirming opportunities in Europe.
Fund buyers are planning to reduce their exposure to developed market fixed income. Two-thirds of respondents said they will decrease their allocation to government bonds and 38% said they would do likewise with corporate bonds.
Investors in the three centres showed a growing interest in absolute-return strategies, which include hedge funds, and in private equity funds. Approximately a third of respondents plan to increase their allocation to both types of products and less than 5% said they would decrease it.
Passive funds
Passive investment funds get very little love from Asian fund buyers, especially when compared to other regions.
Similar research conducted by FSA’s sister publication Expert Investor has shown a clear and growing preference for index-tracking products among fund buyers in Luxembourg, where all respondents said they had them in their portfolios and more than half would use them more in the next 12 months.
In contrast, the graphic on the left shows 21% of investors in the three Asian hubs said they did not use index-tracking products at all, and only 17% showed interest in increasing their allocation to them in the next 12 months.
