NEWS & OPINION 21 Market Outlook IPE Investment Manager Expectations Indicator ▲ Rise • Positive shift (from last month) The IPE Investment Manager Expectations Indicator represents the results of a regular monthly survey of asset managers with one or more European segregated mandates. The 6-12 month views • Stable – No view of the 96 respondents to this month’s questionnaire for equities, bonds and currencies are shown ▼ Fall • Negative shift (from last month) below and on page 22. For aggregated results and a commentary see page 23.

EQUITIES BOND PRICES CURRENCIES Location US Euro-zone Japan UK $ ¥ £ € $/€ $/¥ $/£ Aberdeen Asset ManagementUK ▲ ▲ ▲ ▲ ▲ •• •• ▼• •• ▼• •• ▼• ACT Currency Swi ▼ Partner▼ ▼ • ▼ ▼ ▼ ▼ ▼ ▲ • ▼ ACTIAM Neth •• •• •• •• •• •• •• •• •• • ▲ •• AEGON Asset ManagementNeth •• •• •• •• •• ▼ •• •• •• •• •• •• A.G. Bisset US ▼ Associates▼ ▼ ▼ ▼ ▲ ▼ ▼• ▼ ▼ ▼ ▼ Allianz Global Investors Ger/UK • • ▼• • • ▼ • ▼ • • ▲ • Amundi Fra • ▲ • • • • • • • • • • Apo Asset Management Ger •• •• • • •• • • • • • •• • AVANA Invest Ger • • • • • • ▼• • ▼ •• ▲• • Aviva Investors UK • ▲ ▲ • • ▼ • • • ▲ ▲ ▲ AXA Investment Managers Fra •• • ▼• ▲• • • ▼ • ▲ ▼• ▼• ▼• Bankhaus Lampe Ger • ▲• • • ▲• ▼ • ▼ ▼ ▼• ▼ •• BankInvest Den • ▲ • • ▲ • • ▼ • ▲ ▲ ▲ Degroof Petercam Bel •• ▲ ▲• ▲ ▲ ▼ ▼ ▼ ▼ • • • Bank Julius Baer Swi ▼ & ▲• ▲• Co.▲• ▲ ▼ ▼ •• ▼ ▼• • ▲ Bank J. Safra Swi ▲• Sarasin▲ • • ▲• ▼ ▼ ▼ ▼ ▲ ▲ ▼• Baring Asset Management UK ▼ ▲ • ▲ ▲ ▼ ▼ ▼ ▼ • • ▲• BayernInvest Ger ▲• ▲ ▲ ▲• ▲• ▼ ▼ ▼ ▼ ▲ • ▼• Ger ▲ ▲ • • ▲ •• • ▲ ▲ ▼ ▲• ▼• BNG Vermogensbeheer Neth ▲ ▲ ▲ ▲ ▲ • • • • • • • BNP Paribas Investment PartnersFra ▲• ▲• ▲• ▲• ▲• ▼ • ▼ • ▲ ▲ ▲ BNY Mellon Asset Management UK - - - • • - ▼ ▼ - - • • Candriam Investors Group Lux •• ▲• •• ▲ •• ▼ • ▼ ▼ ▲ ▲ ▲ CBL Asset Management Latvia ▼ ▼ - ▼ - • - - •• ▲ - - CM-CIC Asset Management Fra ▼• ▲ ▼• •• • ▼• • •• •• • ▲• ▲• Columbia Threadneedle Investments US •• ▲ ▲ •• ▲ • • • • ▲• ▲• ▲• CPR Asset Fra Management•• ▲• •• ▼ ▲• ▼ ▼ • ▼ ▲• ▲• •• Swi • ▲ • • • • • ▼• • ▲ • • Deka Group Ger • ▲ ▼ ▲ • ▼ ▼ ▼ ▼ ▲ ▲ ▼• Deutsche Asset & Wealth Management Ger • ▲• ▲ • • ▼• • ▼• ▼• ▲ ▲ ▼ DIAM International UK • • • • • ▼• • • • ▲• ▲• ▲ Dynagest Swi ▼ ▼ - - - •• • • • •• ▲ •• Eagle Asset US Management▲ • • •• • ▲• ▼• • •• ▲ ▲• • Econopolis Bel • ▲ ▲ ▲ ▲ ▼ ▼ ▼ ▼ ▲ ▲ • Edmond de Rothschild Fra • AM ▲ • • • ▼ • ▼• ▲• •• •• • Erste Asset At Management• • • ▲ • • • • • • • ▼ Eurizon Capital It • • • • • ▼ ▼ ▼ ▼ ▲ • ▼ Falcon Private Swi • •Bank • • • • • • • ▲ ▲• ▲ Federated Investors US ▲ ▲ ▲ ▲ ▲ ▼ • ▼ ▼ • ▲ • First Private Ger • ▲ •• ▲ ▲• ▼ ▼• ▼ ▼ ▼• •• ▼• Fonditel Spa • • ▼• • •• ▼• • • • •• •• •• Generali Investments Ger/ItEurope ▼ •• •• •• •• • •• • •• • •• • GNB Gestao Activos Por • ▲• ▲• ▲ • • •• • • • ▲ • Groupama Asset Management Fra ▲ ▲ •• • • ▲• ▲• ▲• ▲• ▲ •• •• Henderson Global UK Investors• • • • • •• •• •• •• ▲• ▲• • Holberg Fondene Nor ▲• ▲• ▲• ▲ ▲• ▼ • ▼ ▼• ▲• ▲• •• Insight Investment UK • ▲ ▲ ▲ • • •• • •• • •• • Invesco Ger ▲ ▲ ▲ ▲ ▲ • • • • • • •

2016 JULY/AUGUST INVESTMENT&PENSIONS

Expectations Indicator Table July/August 2016.indd 21 20/06/2016 15:38 22 NEWS & OPINION Market Outlook IPE Investment Manager Expectations Indicator

EQUITIES BOND PRICES CURRENCIES Location US Euro-zone Japan Asia UK $ ¥ £ € $/€ $/¥ $/£ Asset UKManagement ▲ ▲ ▲ ▲ ▲ • • • • •• •• ▼ IPM Informed Portfolio Management Swe ▼ ▲ •• ▼ ▼ ▲ ▲ ▼ • ▼ ▼ ▲ Irish Life Investment IreManagers • ▲ ▲ • • •• •• ▼ •• ▲ ▲ ▲• La Française Fra ▼ • AM ▼• • •• ▼ •• ▼• ▼ •• ▼• • Landesbank Baden-Württemberg Ger ▼ ▼• ▼ ▼• ▼ • • • • ▲• ▲• • Legal & General Investment UK ▲Mngt. ▲ ▲ ▲ ▲ •• • • • ▲ ▲ • LGT Capital Partners Swi • ▲ • ▼• • ▼ ▼ ▼ ▼ ▲ •• ▲ LocalTapiola Asset ManagementFin ▼ ▼ ▼ ▼ ▼ ▲ ▲ ▲ ▲ ▲ ▲ ▼ Lombard Odier Investment Managers Swi ▲ ▼• •• ▲ • •• ▼• ▲• •• •• •• ▼• Lyxor Asset FraManagement •• •• • • •• • • • • •• •• •• Mandarine Gestion Fra ▼ • • • •• ▼ ▼• ▼ ▼ • • ▲• MEAG Ger •• ▲ ▲ ▲ •• ▼ ▼ ▼ ▼ ▼• ▼• ▼• Metzler Investment Ger • ▲ •• •• • ▼ • ▼ ▼ • • ▲ MFI Asset Management Ger • • • • ▼• ▼ •• ▼ •• • ▼• ▼• Mitsubishi UFJ Asset Management (UK)UK ▲ ▲ ▲ ▲ ▲ ▼ • ▼ ▼ • • ▼ Investment UK/USMngt. • • ▲ ▲ • ▼ ▼ • ▼ ▼ ▼ ▼ Muzinich & Co. UK ▼ ▼ ▼ ▼ ▼ •• •• •• •• ▲• • •• Asset FraManagement •• •• •• •• • • • •• • ▼ •• ▲ NN Investment Partners Neth ▲ ▲• ▲ ▲ ▲ ▼ ▼ ▼ ▼ • ▲ ▼• Nomura Asset ManagementSing ▼• ▼• ▼ ▼• ▼• • • • • ▼ ▼ ▼ Northern Trust Asset ManagementUS ▲ ▲ ▲ ▲ ▲ • • ▼ ▼ • ▲ •• Oddo Meriten Asset GerManagement • ▲ ▲• • ▲ ▼ • ▼• ▼• ▲• ▲ ▲• OFI Asset Fra Management• ▲ • ▲ • • • • • • ▲• ▲• Optiminvest Swi ------• ▲• - Ostrica Neth ▲ • ▼ ▲ ▼ • ▼ ▲ • ▼ • ▲ PATRIZIA Ger • ▲ ▲ ▲ • • • • • ▲ ▲ • PGIM Fixed Income UK ▲ ▲ ▲ ▲ ▲ • • • • ▼ ▼ ▼ Pictet Asset SwiManagement ▼ ▲ ▲ •• • ▲ ▼ ▼ ▼ • • • PineBridge Investments US • ▲ ▲ • • ▼• ▲ • ▲ ▲ ▲ • Pioneer Investments It • ▲ ▲ ▲• • •• •• ▼ ▼• ▲ ▲ • Principal Global Investors US ▲ ▲ ▲ ▲ ▲ ▼ ▼ ▼ ▼ • • • Robeco Group Neth •• ▲ • ▲ ▲ ▼ • ▼ ▼ ▲• • ▼• Rogge Global Partners UK - - - - - • •• • • • ▲ ▲ Russell Investments US • ▲ • • • ▼ • • • ▲• •• •• Salus Alpha Liecht • Capital• • • • • • ▲ • • • • SEB Investment Management Den ▼ • ▼ ▼• ▼• • • • ▲• ▲ ▼ ▼• Standard Life UKInvestments • ▲ • ▼ • ▼ • ▼ ▲ ▲ ▲ ▲ Stone Harbor Investment PartnersUS • ▲ ▲ • • ▼ • ▼ ▼• •• ▲ ▼• Swiss Life Asset Swi ▲ Management▲ ▲ ▲ ▲ ▼ ▼ ▼ ▼ ▲ ▲ ▲ Sycomore Asset Management Fra ▼ • • ▼ • • • • • • ▲ • Syz Asset Management Swi • ▲ •• ▲ • • • ▼• • • • •• TIAA US • ▲ ▼ • ▲ • • • • ▼ ▼ • UBS Global Asset Management Swi/UK ▼ ▲ ▲ ▲ ▼ ▲ • ▼ • ▲• ▼ • Union Bancaire Privée Swi •• ▲ • ▲• ▲• ▼ • ▼ •• ▲ ▲ • Union Investment Ger • • • • • ▼ ▼ • • ▲ - ▲• Wells Capital USManagement ▼ ▲ ▲ ▼• ▼• ▼ • ▼ •• ▲ ▲ ▲ Woodman Asset ManagementSwi ▲• ▲• ▲• ▲• ▲• • • •• • ▲• ▲• • Zürcher Kantonalbank Swi ▲• ▲ ▲• ▲• • ▼ • •• • • ▲ •• % predicting rise (previous month) 24 (24) 63 (57) 40 (35) 33 41 (25) (42) 7 (9) 5 (7) 6 (8) 9 (12) 43 (43) 48 (48) 27 (31) % predicting stability (previous month) 55 (48) 27 (34) 44 (44) 45 54 (45) (55) 45 (41) 66 (60) 46 (44) 55 (49) 41 (44) 38 (37) 48 (50) % predicting fall (previous month) 21 (28) 10 (9) 16 (21) 13 14(20) (13) 48 (50) 29 (33) 48 (48) 36 (39) 16 (13) 14 (15) 25 (19)

INVESTMENT&PENSIONS EUROPE JULY/AUGUST 2016

Expectations Indicator Table July/August 2016.indd 22 20/06/2016 15:39 NEWS & OPINION 23 Market Outlook $ Bonds ¥ Bonds Overview During the survey period, managers 100 100 IPE Investment experienced a different environment 90 90 than during the two prior months. Manager 80 80 The dollar reversed its weaken- 70 Expectations 70 ing trend, and commodity prices 60 60 diverged as oil prices rose, metals’ Indicator 50 50 declined, and coming screaming to 40 40 the forefront of geopolitical head- Summary 30 30 lines was the Brexit vote. of managers’ 20 20 10 10 expectations 0 0 (pages 20 and 22) A S O N D J F M A M J J A S O N D J F M A M J J

£ Bonds € Bonds Bonds Commentary by 100 100 The collective expectation for bond Peter Laurelli, 90 90 prices to rise, across all denomina- Vice-president, global head of research, 80 80 eVestment tions, was at its lowest in two years. 70 70 Expectations for sterling bond prices 60 60 to rise matched their lowest level in 50 50 the two-year span with only 6% of 40 40 respondents saying sterling bonds 30 30 appear attractive. Only yen bonds 20 20 had less supportive indications. 10 10 0 0 A S O N D J F M A M J J A S O N D J F M A M J J

US equities Euro-zone equities 100 100 90 90 Equities 80 80 70 70 Previously expectations for all equity 60 60 markets to increase were at two-year 50 50 lows, and expectations for declines 40 40 were elevated. A month later, the % of managers expecting rise 30 30 dour mood has slightly abated. While 20 20 collective expectations for gains have % of managers expecting stability increased, they remain low. As the 10 10 concerns over Brexit magnified, the % of managers expecting fall 0 0 expectations for UK equity market A S O N D J F M A M J J A S O N D J F M A M J J gains increased more than any other markets. Japan equities Asia equities UK equities

100 100 100 90 90 90 80 80 80 70 70 70 60 60 60 50 50 50 40 40 40 Currencies 30 30 30 Unsurprisingly, all eyes are focused 20 20 20 on sterling. There was no change in 10 10 10 the level of expectation for the dollar 0 0 0 A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J to strengthen against the euro for the fifth month, though there has been a bit of defection from those expecting stability, into the dollar/ $/€ $/¥ $/£ euro weakness camp. The biggest move in the survey period was an 100 100 100 increase in those expecting the dollar 90 90 90 to fall against sterling. The implica- 80 80 80 tion being, since September 2015, 70 70 70 managers have increasingly believed 60 60 60 the dollar will weaken versus 50 50 50 sterling, reaching a level in the most 40 40 40 recent survey that is far above any 30 30 30 prior month in at least the last two 20 20 20 years. If a Brexit ‘yes’ vote resulted 10 10 10 in weakening the pound, then fewer managers than in any recent month 0 0 0 A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J expect this scenario to occur.

2016 JULY/AUGUST INVESTMENT&PENSIONS EUROPE

Expectations Indicator Table July/August 2016.indd 23 20/06/2016 15:39