Fund managers facing market uncertainty
Despite volatility, there are no clear trends in the market
After another episode of roller coaster, assets at risk of suffering from suspicion of inflation end up as-is. The S & P 500 recorded the largest decline (-4%) in almost two years, then temporarily entered the “bear market” (down more than -20%) and recovered steadily and strongly at the end of the month.
In a turbulent environment, Europe managed to maintain its own growth, recording + 0.3% growth, unlike the Unclesam country, which fell -2.4%. Emerging economies are heading above the surface (+ 0.16% MSCIEM), thanks to slight mitigation of sanitation measures in China and good results from Brazil and India.
In the Old World, the rise in the energy sector (+ 10.3%!) Is even more spectacular in that it is the only theme that has really attracted investors. Conversely, Telecom (+ 1.34%), Treasury (+ 0.65%), and Materials (+ 0.3%) recorded timid performance. Consumer staple foods, which were strong last month, plummeted again (-4.4%), followed by healthcare (-3.8%) and technology (-3.7%), especially under the influence of aggressive rhetoric from central banks. I did.
How diversified investors adjusted their portfolio
At DNCA Evolutif, net exposure to equities fell below 60% at the end of May, but was 75% at the peak of market recovery. Tikehau International Cross Assets is also on a downward trend. In a volatile market, management maintained a defensive approach, reducing the fund’s net exposure from 26.2% at the end of April to 21.8% at the end of May.
At Tailor Allocation Defensive, the fund’s equity sensitivity dropped from 24.5% to 22%, especially due to the sale of Cyclic in Europe.
Strong downward movement even with Echiquier Allocation Flexible. The fund will reach the end of the month with 27.7% equity exposure compared to 37.1% at the end of April. This is the lowest level since April 2020. In addition, the fund has reduced its exposure to inflation themes. On the other hand, by reducing and refocusing our exposure to break-even inflation in the euro area alone.
On long / short, Sycomore Long / Short Opportunities net exposure dropped from 70% to 66%. ELEVA Absolute Return Europe aims for stability with equity exposure of nearly 22%. BDL Rempart Europe also maintains a stable level of exposure, but above 36%.
Within Oddo BHF Polaris, equity exposure was stable for “moderate” or “balanced” funds, but increased from 47% to 55% for “flexible”. Morgan Stanley’s Global Balance Risk Control Fund also increased slightly in both the equity portion, which rose from 26% to 28%, and the fixed income portion, which rose from 55% to 61%. It is certainly noteworthy that some managers are taking on bond risk due to rising interest rates.
For R-Co Valor (de Rothschild & Co AM Europe), the fund’s equity exposure for the month rose from 81% last month to 85%. Managers primarily assumed the risk of growth stocks, and the valuation of certain stocks was particularly attractive.
The most powerful moves are credited to Invest Latitude Equilibre. It went from 35% to 51% of the stake in Nasdaq and US biotechnology due to a tactical reopening in the middle of the month.
In Carminac, whether it is “patrimoin” or “emerging patrimoin,” exposure remains very low, close to 10%, in a “complex environment” between rising inflation and slowing growth.
With rising rates and widening spreads, some managers should be aware that they have increased their bond components, such as the Syscomore Next Generation, which has increased this asset class from 45% to 52%. The movement is the same in OddoBHF PolarisModerate.