Pandemic-era bond purchases will start being wound down in Europe over the coming quarter, said The European Central Bank on Thursday.
Markets were expecting the news, coming on the back of better-than-expected growth figures and mass vaccination drives bolstering coronavirus recovery prospects in the bloc.
Fund managers see European equities and credit benefitting from a regional shift in momentum, as company earnings continue to improve across the bloc.
Another round of easing could come as early as March 2022, though.
Once the ECB’s emergency bond-buying scheme runs out, the world’s largest asset manager BlackRock says the central bank will need to step up its regular asset purchases against a weak inflation outlook.
Meanwhile, borderless digital currencies are once again facing volatility.
Earlier this week, the news that El Salvador has adopted bitcoin as legal tender in the country prompted the cryptocurrency’s price to crash to its lowest in nearly a month.
This put an end to the brief turnaround in investor sentiment toward digital asset investment products, with bitcoin funds receiving their first weekly inflows in two months, according to Coinshares’ weekly data.
Elsewhere, fund managers are speaking out against “status quo bias” in the asset management industry, which encourages managers to hug their benchmarks by taking small positions in a large array of stocks.
Nomura Asset Management says that over 60 per cent of Large Cap Active Global Equity funds in a popular database have more than 50 stock holdings. Almost 40 per cent hold more than 80 stocks.
Fund managers should invest with higher concentration in their “best ideas” to maximise potential for outperformance, according to Nomura Asset Management.
Madeleine Taylor
Editor, Institutional Asset Manager