Swiss investors will continue to pile into Europe equities over the next six months while emerging markets took centre stage when it comes to fixed income exposure.
In response to a survey on allocation outlooks, investment professionals and fund selectors gathered in Gstaad for Citywire Switzerland 2017 revealed their positive stance on emerging markets in general.
This saw 60% of respondents say they had either a positive or strong conviction for the asset class as a whole, while 41% of respondents are backing EMD.
Ahead of Nenad Pacek, president of Global Success Advisors and EM economist's speech, only 1% of the audience said they are completely avoiding emerging markets as an investment, while three quarters revealed a strong support towards the developing world.
This echoes last year’s sentiment as Swiss selectors named emerging market debt as the area they were most likely to add exposure to in fixed income.
One year on, European bonds remain the most unloved market, receiving 4% of the votes.
Emerging markets was the second most popular of the equity regions, with 30% of those present saying they will be increasing their exposure in the next six months.
North American equities proved the least attractive, with only 1% saying it is the region they will be scaling up on the most, while Swiss equities received only 10% of the votes.
Of more than 70 participants, 27% said convertible bonds is the asset class they will be adding to the most over the coming six months.
European bonds are the most unloved of the fixed income options, drawing only 4% of the votes, along with corporate bonds, which only attracted 7%.
In the alternative space, hedge funds are back in vogue with Swiss investors, as more than a quarter of participants said it is the investment they will be increasing allocation to going into the later stages of the year.
Private equity is the second most popular non-standard asset class they are backing, with 19% of the votes. This is while infrastructure pulled the least votes, with only nine backers.
In terms of equity, investors in Switzerland are still scaling up exposure to European equities, which received 37% of votes. EM equities took second with 30% of the vote.
Swiss stance on MiFID II
When asked how they would describe the Swiss investment community ahead of MiFID II coming into effect, nearly half of those present said they are watchful but not worried but, even so, work still needs to be done.
However, this level of confidence wasn’t unanimous around the room as 38% said they are increasingly concerned and that it will have a bigger impact than people realise.
In fact, only 11% believes the Swiss community is perfectly calm and that adequate measures are in place.