IN THIS PAPER

As equity and fixed income markets rebounded in the fourth quarter, certain active manager groups navigated the risk-on shift better than others. Relative performance was particularly strong among active global equity managers, where 75% outperformed the index, and European investment grade credit – who benefited from clearer central bank signalling than their largely underperforming US counterparts.

Within the diversifying strategies sector, the macro and trading composite came out on top in 2022, gaining +15.9% despite a relatively poor final quarter, returning -3.1%, Breaking this down by sub-composite, core trend managers saw the worst quarterly losses at -5.5%, yet they still took gold come year end, returning just shy of +21%. Just shy of that was our discretionary macros compositive, returning 20.75% in 2022 and even recording a positive Q4 at 0.5%.

Among bfinance clients, private market asset classes dominated new manager search activity, despite a slowdown in overall industry fundraising. Illiquid strategies accounted for 58% of all new mandates in 2022, compared to 49% in 2021. We also note a slight increase in fixed income manager search activity. These trends were largely facilitated by a significant decline in equity manager search activity, which represented just 15% of all new mandates in 2022: this is the lowest level seen to date, as investors’ eyes move from inflation towards the prospect of recession.

Although the bfinance Risk Aversion index has moved into less bearish territory, multi-asset managers have continued to cut equity exposures— traditionally seen as a sign of defensiveness.

While 2022 has brought a significant increase in client demand for Portfolio Design support, the majority of these engagements have focused on refining specific portfolios (such as reviewing and adjusting exposures in a particular asset class) rather than making major overarching changes to asset allocation. We anticipate more meaningful reevaluation of strategic asset allocation in 2023.

WHY DOWNLOAD?

Each quarter, bfinance publishes information on investor activity, key market trends and manager performance. A quarterly snapshot of the key developments within equity, fixed income and alternative investments, including analysis of which asset manager groups performed well and which didn't.