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Special Report

Impact investing


Top 400 Asset Managers: Diamonds and duds – a poll apart

Roger Price-Haworth reviews the results of the sixth AIMSE International diamonds and duds poll, and considers how views have changed

For the past six years, the Association of Investment Management Sales Executives (AIMSE) has polled asset managers, investment consultants and pension funds to discover which investment products they think will experience most asset growth in the next three to five years (the diamonds) and which will flounder (the duds).

The 2013 poll received contributions from 104 pension funds, consultants and asset managers, providing a snapshot of what those at the sharp end of pension investment in the UK are thinking.

The poll was conducted in March 2013 and the results were presented to AIMSE members at the annual Consultant Conference in London in April. Respondents were given a list of 28 investment products and asked to select five ‘diamonds’ (those which would show the greatest growth in AUM) and five ‘duds’ (those with the lowest predicted growth) over the next three to five years.

As the table reassuringly shows, there continues to be a great deal of agreement between the three groups. Over recent years we have seen a growing trend towards better risk budgeting – where schemes adopt a de-risking strategy and combine it with an alpha generating component – and again in 2013 we see strong support for this type of approach, with products such as liability-driven investment, diversified growth funds, unconstrained equity and LIBOR-plus strategies all ranking highly.

Also notable was infrastructure’s place as the number-one diamond for pension funds – though given the government’s rhetoric on the subject it may not be such a surprise. The somewhat less bullish ranking from consultants and asset managers might also suggest that they are less certain about how the plans might pan out.

At the other end of the spectrum are the duds. Unsurprisingly, we see waning support for regional equities and bonds, undoubtedly fallout from the shift towards more globally diversified asset classes.

While the results of the survey admittedly help to support some of the more obvious longer term trends, it’s the results just outside the (top and bottom) five that provide the most interesting insights into potential changes in demand. In response to discussion and feedback from the 2012 poll, we separated out EMD, high yield, global long-only and global absolute return bonds providing an interesting insight into how these areas may develop.

With fears over the health of the global economy and a strong run from credit obviously front of mind, respondents shied away from high yield and global bonds. Conversely, they showed strong support for EMD and absolute-return bond strategies. These results pose a number of questions: while tactical allocations to EMD have been popular for some time, could these findings begin to suggest a long-term, more strategic allocation to this asset class? Could the popularity of DGFs be mirrored through do-anything, go-anywhere, diversified income funds?

Future AIMSE surveys will look to explore these and other findings in due course. However, what is clear is that the future of the investment landscape is one with fewer constraints and more opportunities, but also framed by a stronger focus on risk management and budgeting.

In summary
The sixth AIMSE diamonds and duds survey reveals that a great deal of consensus between asset managers, consultants and pension funds on which investment strategies will gain in popularity over the coming years:
• There is a clear shift towards risk budgeting – separate de-risking and alpha generating components;
• The list of duds suggests that regional assets (both bonds and equities) are on the wane, with the shift towards a global view;
• Income and yield remains a focus but investors are identifying opportunities outside the traditional government bond markets. Could this be a turning point towards more strategic allocations in alternative income-providing asset classes?

Roger Price-Haworth is chairman of AIMSE International


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