Great Rotation? Actually a small oscillation, says accelerando poll

Fund flow data from a survey of 54 fund selectors suggests small oscillations, rather than a great rotation from bonds into equities, is occurring.

“The picture in our survey is extremely heterogenous and supports our view that no wide reallocations into equities are happening and are not expected to happen on the short term,” said accelerando managing partner Philip Kalus (pictured).

“Some respondents have expressed the lack of confidence as the major reason for staying defensive.”

Replies to the poll, conducted in April, were co-ordinated from 54 multi managers/funds selectors from five European countries. Participants were asked for their views on a great versus gradual rotation into equities, their favourite asset classes (regions), active vs passive preferences, long only vs long-short and style tendencies for future investments.

About one third of those polled (33.3%) said a “gradual” rotation is happening, while around one fifth expected no major change. Just over 10% considered that a “great” rotation is happening already.

The favourite investment destinations for equities are Northern American, Emerging Markets (including Frontier Markets) followed by Japanese equity funds. Reallocations that are happening and those expected to happen are coming out equally of fixed income and money market funds.

“The preference of long-only versus long-short funds reflects in our view of the long-only nature of the business of the majority of respondents of the survey,” said Kalus.

“Interestingly a clear bias to value vs growth equity funds can be identified, if style approaches are applied. A slight overweight in defensive stocks has been also expressed.”

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