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Q2 2016 PSN Top Guns - Brexit Vote Rattles the Global Market

Aug 29, 2016 Ryan Nauman

Brexit was the dominating theme throughout the second quarter of 2016. Global markets zigged and zagged every time a new Brexit poll was released. Despite the global sell-off during the days immediately following the Brexit vote, global markets rallied to finish the quarter up 1.21% (MSCI World Index). 

Record low interest rates and concerns regarding the strength of global economies caused investors to search for quality, driving Sovereign debt yields to record lows. This flight to quality provided price support for Sovereign debt around the world as the Citigroup World Government Bond index finished the quarter up 3.41%.

Strategies that placed an emphasis on income and overweight energy stocks performed well during the quarter.  A rebound in oil after a rough start to 2016, along with investors’ hunt for income helped propel the Russell 1000 Value index to a 4.58% return. Below are some of the strategies that make up the Large Cap Value PSN Top Guns.

  • ValueWorks: Capital Appreciation (+10.2% for the quarter)
  • Reaves Asset Management: Long Term Value (+9.3% for the quarter)
  • Delaware Investments: Large Cap Value Focus (+9.1% for the quarter)

It was a tumultuous quarter for European investors. Concerns over the health of some European economies, Italian bank worries, all culminating with the U.K. leaving the European Union caused for a very volatile quarter. After a deep sell-off immediately following the Brexit vote, markets calmed with the swift naming of Theresa May as new Prime Minister of the U.K. This collective uncertainty led to a -2.29% return for the MSCI Europe index. The following strategies made the PSN Top Guns list for the Europe Universe.

  • Financial Trust: Europe ValueMomentum (+2.1% for the quarter)
  • Pyrford International: European Equity (+1.7% for the quarter)
  • Walter Scott: European Strategy (+0.7% for the quarter)

Economic concerns, along with the Brexit outcome, played a role in the U.S. Federal Reserve deciding to keep rates unchanged.  A combination of investors searching for safety and low treasury yields, pushed investors to focus on corporate debt; namely low quality debt in their search for income.  The BofA Merrill Lynch US High Yield index finished the quarter up 5.88% as a result. Below are some of the strategies that make up the High Yield PSN Top Guns.

  • Advisors Asset Management: Credit Opportunities (+14.8% for the quarter)
  • J.P. Morgan Asset Management: Distressed Debt (Columbus) (+12.1% for the quarter)
  • Nuveen Asset Management: High Yield Fixed Income (+8.9% for the quarter)
The complete list of PSN Top Guns and an overview of the methodology can be located on www.informais.com under the “Resources” tab.  If you do not have a login, you can complete the registration process for complimentary access.  For more details on the methodology behind the PSN Top Guns Rankings, or to purchase PSN Top Guns Reports, contact Ruth Calderon at ruth.calderon@informais.com.

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