The reigniting of the US-China trade war as well as a shock election result in Argentina saw an uptick into research into both emerging market debt and equity strategies, according to data from FE Analytics.
While the Fed rate cut at the end of July was a welcome, if long-anticipated, move there were several developments in the geopolitical space to cause concern.
Having initially announced that some tariffs would be delayed until December, US president Donald Trump further provoked a Chinese reaction with several outbursts on social media ordering US firms to stop sourcing from China and raising existing tariffs.
In the UK, hopes of a forthcoming Brexit deal were raised as new prime minister Boris Johnson met his European counterparts including Angela Merkel and Emmanuel Macron.
However, expectations of a ‘no deal’ outcome surged after Johnson, a figurehead of the ’leave’ campaign, announced he had asked the queen to delay the opening of parliament making it difficult for any anti-‘no deal’ legislation to be passed before the Halloween deadline.
In this monthly article, we reviewed the Investment Association universe to find out which funds were being researched more heavily in August 2019 when compared with the previous 12 months.
The chart below – which shows the change in each Investment Association sector’s share of FE Analytics research activity –found that funds focused on emerging markets bonds and Chinese equity strategies garnered the most attention during August.
Sector research share change between August 2019 and previous 12 months
Source: FE Analytics Market Intel Tool
A difficult month for emerging markets may have prompted advisers to check up on how the strategies were performing.
"Global emerging markets led equities lower in August as a surprise result in Argentina’s election sent the stock market plummeting, falling 48 per cent – in US dollar terms – in one day," said Adrian Lowcock, head of personal investing at Willis Owen.
Argentina could see a return to populism after market-friendly president Mauricio Macri suffered a heavy defeat to a left-wing candidate in the primary election. The result triggered a fall in the Argentinian peso and pushed up the value of debt, making another default likely.
The ongoing war of words between US president Donald Trump and Chinese authorities on trade has further resulted in increased interest in individual Chinese equity strategies.
Meanwhile, the biggest decline in research last month was seen amongst multi-asset strategies.
Source: FE Analytics Market Intel Tool
Two HSBC Global Asset Management funds were among those seeing the biggest uptick in interest during August were two HSBC funds.
The first was the £1.2bn HSBC GIF Chinese Equity fund overseen by Mandy Chan, which and is up by 14.66 per cent during the first eight months of the year compared with a gain of 17.17 per cent for the average IA China/Greater China peer.
The second most-researched fund was the $2.6bn HSCB GIF Global Emerging Markets Local Debt, managed by Nishant Upadhyay and Billy Lang, which is up by 7.17 per cent in 2019-to-31 August.
Beyond the numerous emerging market equity and emerging market debt strategies dominating the top of the research table, there was also increased interest in Ned Neylor Layland’s Merian Gold and Silver, one of the best performing strategies last month, given its focus on the ‘safe haven’ asset.
Source: FE Analytics Market Intel Tool
The funds garnering less attention in August included a number of European equity strategies, as well as several focused on UK equities.
It comes as Germany has begun showing signs of slowing growth and concerns about a hard Brexit have been renewed by UK prime minister Boris Johnson.