This quarter, the Celsius investment sentiment index – a quarterly investment sentiment indicator produced by Financial Times Publishing – is a tale of two sides: sector and region confidence is consolidating, while adviser appetite by asset class and product type is becoming increasingly polarised.
As western stockmarkets continue to rally, adviser appetite for growth equities has surpassed income equities for the first time in two years – and almost three-quarters of IMA Sectors have received a positive quarterly sentiment shift going into the second quarter of 2013.
For regions, the UK was the only investment destination to experience a contraction of adviser sentiment (-7 points), while Latin America remained unmoved since last quarter; the other regions all enjoyed a boost in adviser confidence.
None more so than Japan, with a 31-point sentiment increase as a region and IMA Sector, as advisers take a shine to the market-friendly policies of prime minister Shinzo Abe. Japan reached a Celsius index reading of 22, advisers’ warmest outlook for the country on record. IMA Japan was also elevated from negative territory for the first time since Celsius began in the fourth quarter of 2010, with a moderate index reading of 10.
The British Isles, in contrast, did not fare so well. However, the negative adviser sentiment shift for the UK is at odds with the FTSE’s recent rally. While the economy leaves much to be desired, its stockmarket remains a real contender for investors.
As adviser appetite returns to the stockmarkets of North America, Europe ex UK and Japan, it will be interesting to see which of these emerge as a front runner for investment. This quarter, the IMA North America sector received only an 8-point sentiment shift, while the North America region achieved just a 3-point increase. Even with this lacklustre result, if advisers continue to warm to North America, it could reach its highest ever sentiment reading next quarter.
Equities continue to dominate the asset class stakes, with clear blue water between adviser confidence in equities and the next-preferred asset class, alternatives. Equities (growth) has surpassed equities (income) for the first time since the second quarter of 2011, with a quarterly sentiment shift of 15 points.
In terms of products, this quarter multi-asset achieved its highest sentiment reading (58 points) from advisers, with a 6-point increase on last quarter. The correlation of adviser sentiment towards multi-asset and Oeics/unit trust products continues, although multi-asset appetite remains considerably below that of Oeics.
In spite of advisers operating in a post-RDR environment, passives such as ETFs and index trackers remain firmly in neutral.
Anna Lawlor is director of Social i Media
