Fund Buyer Trends - Research Insights: Japan/US

Fund managers, selectors divided on Japan/US

• More often than not, fund managers and fund selectors tend to agree on where they think the markets are heading. Not so, however, when it comes to the US and Japan.

• Prior to 2015 fund selectors had roughly the same views on the US and Japanese equity markets. Then in 2015 it diverged.

• As you can see from the top graph, the net % of fund selectors looking to buy more Japanese equities rose then fell, while attitudes to US equities fell then rose – close to perfect negative correlation.

• The views of fund managers, on the other hand, have been very different. They have been consistently positive on Japan, while the prediction on US equity performance climbed slowly until the start of 2015 and has since collapsed.

• So at exactly the time that fund selector outlook on the US is improving, the fund managers have rarely been so negative on the market.

• The difference in attitude to Japan could be explained by portfolio construction issues – when a fund selector moves assets out of the US, it has to go somewhere – on average, all the other asset classes will do better.

• But there is still a direct disagreement in the direction of US equities – next issue we will get an indication of who is right.

Source: Expert Investor Europe, 'The Fund Selector Asset Class Report' October 2015