Randal Goldsmith: From our recent discussions with multi-asset managers, we've found less common ground than usual and generally, lower conviction. About the only commonality we really found is that manager have found this year a particularly difficult one in which to make investment calls.
Why is that? There have been a number of challenges this year. The first has been market volatility. The year began with equity markets in sharp descent, then followed by an equally strong recovery from the middle of February. Another challenge has been stock and sector rotation. Previously, stable growth stocks had outperformed value in cyclicals for one of the longest periods in history. The outperformance by small and mid-cap stocks had been equally extended.
The final challenge has been the Brexit and Presidential election votes. In each case, opinion polls have shown the votes to be close. But on the other hand, the implications for which stocks will outperform have been significant. For example, following the Brexit vote investing in international stocks, that's been a clear winning strategy.
So, how have fund managers responded to this? Generally, by reducing directional and style bets in their portfolios and instead, emphasising fund and stocks specifics.
