Quarterly Trends Webcast March 2020 What Well Cover 1. Global - - PowerPoint PPT Presentation

Quarterly Trends Webcast

March 2020

What We’ll Cover

1. Global Asset Movement 2. Consultant & Investor Screening Behavior 3. Mandate Trends 4. Finding Opportunities

John Molesphini Global Head of Insights, eVestment

Source: eVestment Database

Underlying This Trends Analysis

25,000+

Institutional Strategies

4,000+

Asset Management Firms Reporting Data

895+

Consultants & Investors Conducting Screens

$80T

AUM Represented By Managers Reporting Data

10,000+

Manager Screens By Investors & Consultants Each Quarter

60,000+

Public Plan Documents

180,000+

Product Views By Investors & Consultants Each Quarter

3

Products AUM ($B) US Equity 3,607 $15,026 US Fixed Income 2,631 $13,611 Global Equity 1,644 $4,040 Global Fixed Income 911 $2,488 EAFE Equity 550 $1,890 ACWI ex-US Equity 391 $1,755 Emerging Markets Equity 691 $1,553 Global Balanced/TAA 503 $1,018 Europe Fixed Income 452 $878 Emerging Markets Fixed Income 414 $844

Source: eVestment Analytics

Underlying This Trends Analysis

4

2019 2020 Through February S&P 500 31.49%

• 8.27%

Bloomberg Barclays US Aggregate 8.72% 3.76% MSCI World-GD 28.40%

• 8.94%

Bloomberg Barclays Global Aggregate 6.84% 1.96% MSCI EAFE-GD 22.66%

• 10.92%

MSCI ACWI ex-US-GD 22.13%

• 10.35%

MSCI EM-GD 18.90%

• 9.68%

50% MSCI World/50% Citi WGBI 16.57%

• 3.24%

Bloomberg Barclays Euro Aggregate 4.07% 0.15% JPM EMBI Global Diversified 15.04% 0.54%

Source: eVestment Analytics

Underlying This Trends Analysis

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Global Asset Movement

State of Long-Only

Source: eVestment Analytics and Asset Flows

• $300,000
• $100,000

$100,000 $300,000 $500,000 $700,000 $900,000 $1,100,000 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019

$0

Cumulative Institutional Flows Reported Institutional AUM 60% MSCI World/40% WGBI

7

Institutional AUM with Flows Overlay

Source: eVestment Analytics and Asset Flows

• $3,750,000
• $2,250,000
• $750,000

$750,000 $2,250,000 $3,750,000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Fixed Income Flows Equity Flows

BALANCED/MULTI-ASSET FIXED INCOME EQUITY

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Balanced/Multi-Asset Flows

8

Active vs. Passive Cumulative Flows

Source: eVestment Analytics and Asset Flows

• $3,750,000
• $2,750,000
• $1,750,000
• $750,000

$250,000 $1,250,000 $2,250,000 ACTIVE EQUITY

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

ACTIVE FIXED INCOME FLOWS PASSIVE EQUITY FLOWS PASSIVE FIXED INCOME FLOWS ACTIVE EQUITY FLOWS

9

Inflow Drivers – Q4 2019 (Institutional Only)

Source: eVestment Analytics and Asset Flows ($M)

$284,555

P r i o r F o u r Q u a r t e r s

$4,798 $10,624 $3,699

• $10,635
• $950

$17,300 $10,298 $4,402

• $3,889

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 US Cash Management US Core Plus Fixed Income US Core Fixed Income Global Passive Fixed Income US Long Duration Fixed Income Diversified Growth Funds US Passive Core Fixed Income US High Yield Municipal Fixed Income Buy and Maintain Credit Fixed Income Canadian Core Fixed Income

10

Outflow Drivers – Q4 2019 (Institutional Only)

Source: eVestment Analytics and Asset Flows ($M)

• $75,352

P r i o r F o u r Q u a r t e r s

• $35,683

$13,618

• $55,948

$5,671

• $42,742
• $14,052
• $14,144
• $8,200

$23,757

• $30,000
• $25,000
• $20,000
• $15,000
• $10,000
• $5,000

$0 US Large Cap Value Equity Global Large Cap Core Equity EAFE Passive Equity US Large Cap Growth Equity US Short Duration Fixed Income US Floating-Rate Bank Loan Fixed Income EAFE Large Cap Core Equity US Enhanced S&P 500 Equity Global Emerging Mkts Fixed Income - Local Currency US Passive S&P 500 Equity

11

Largest Positive Shifts (Institutional Only)

Source: eVestment Analytics and Asset Flows ($M)

Q 4 2 0 1 9 P R I O R F O U R Q U A R T E R S

• $50,000
• $40,000
• $30,000
• $20,000
• $10,000

$0 $10,000 US Corporate Fixed Income Global Passive Equity US Long Duration Fixed Income US Balanced Global Emerging Mkts All Cap Core Equity UK Passive Equity Global Large Cap Value Equity Canadian Core Fixed Income Asia ex-Japan All Cap Value Equity US Passive Russell 1000 Growth Equity

12

Largest Negative Shifts (Institutional Only)

Source: eVestment Analytics and Asset Flows ($M)

Q 4 2 0 1 9 P R I O R F O U R Q U A R T E R S

• $20,000
• $10,000

$0 $10,000 $20,000 $30,000 $40,000 US Enhanced Cash Management US Passive S&P 500 Equity EAFE Passive Equity Global Multi-Sector Fixed Income Europe Fixed Income - Cash Management Global Emerging Mkts Passive Equity US Short Duration Fixed Income US Passive Large Cap - Other Indices ACWI ex-US Passive Equity Europe Fixed Income - Corporate

13

Recent State of the eVestment ESG Universe

Source: eVestment Analytics and Asset Flows

$592B AS OF Q4 2019 AUM FLOWS

$(10,000) $(5,000) $- $5,000 $10,000 $15,000 $20,000 2015 2016 2017 2018 2019

EMEA US APAC Canada 14

Consultant & Investor Screening Behavior

Shifts in 150,000+ Consultant & Investor Views

Source: eVestment Advantage – Q4 2019

• 0.1%
• 2.3%
• 0.6%

+1.4% +1.0%

• 0.1%

+0.2% +0.4%

16

Universes With Highest Average Product Views By Investors & Consultants Globally

Source: eVestment Advantage – Q4 2019

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 eVestment Global Emerging Mkts All Cap Core Equity eVestment ACWI ex-US Small Cap Growth Equity eVestment Canadian All Cap Value Equity eVestment ACWI ex-US Large Cap Value Equity eVestment Canadian Large Cap Value Equity eVestment Global Emerging Mkts All Cap Value Equity eVestment Global Emerging Mkts All Cap Growth Equity eVestment Global All Cap Growth Equity eVestment ACWI ex-US All Cap Growth Equity eVestment EAFE All Cap Value Equity

17

Universes Most Viewed By U.S. Investors & Consultants

Source: eVestment Advantage – Q4 2019

500 1000 1500 2000 2500 3000 3500 4000 4500 eVestment Global Large Cap Core Equity eVestment Global All Cap Core Equity eVestment US Core Fixed Income eVestment US Large Cap Core Equity eVestment Global Emerging Mkts All Cap Core Equity eVestment US Small Cap Core Equity eVestment US Small Cap Growth Equity eVestment US Large Cap Growth Equity eVestment US Small Cap Value Equity eVestment US Large Cap Value Equity

18

Universes With Largest Changes In U.S. Investor & Consultant Interest

Source: eVestment Advantage – Q4 2019

0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% eVestment US Multi-Sector Fixed Income eVestment Global Tactical Asset Allocation eVestment Global All Cap Value Equity eVestment US Long Duration Fixed Income eVestment Global All Cap Growth Equity eVestment Global Large Cap Core Equity eVestment Global All Cap Core Equity eVestment US Small-Mid Cap Core Equity eVestment Global Large Cap Growth Equity eVestment US Core Plus Fixed Income

19

Universes Most Viewed By EMEA Investors & Consultants

Source: eVestment Advantage – Q4 2019

250 500 750 1000 1250 eVestment Global All Cap Value Equity eVestment Global Emerging Mkts Fixed Income - Hard Currency eVestment Global Unconstrained Fixed Income eVestment Global Large Cap Growth Equity eVestment Diversified Growth Funds eVestment Global Large Cap Value Equity eVestment Global Emerging Mkts All Cap Core Equity eVestment Global All Cap Growth Equity eVestment Global Large Cap Core Equity eVestment Global All Cap Core Equity

20

Universes With Largest Changes In EMEA Investor & Consultant Interest

Source: eVestment Advantage – Q4 2019

0.00% 0.25% 0.50% 0.75% 1.00% eVestment Canadian Large Cap Core Equity eVestment US Securitized Fixed Income - Non-Traditional eVestment Pan-Europe Small Cap Equity eVestment US Securitized Fixed Income - Mortgage eVestment Europe Fixed Income - Corporate eVestment Global Credit Fixed Income eVestment US High Yield Fixed Income eVestment Global High Yield Fixed Income Fund of Funds - Multi-Strategy eVestment Global All Cap Growth Equity

21

Universes Most Viewed By APAC Investors & Consultants

Source: eVestment Advantage – Q4 2019

100 200 300 400 500 600 700 eVestment Japan All Cap Value Equity eVestment US Large Cap Value Equity eVestment Global All Cap Value Equity eVestment Global Emerging Mkts All Cap Core Equity eVestment Global Large Cap Growth Equity eVestment Global Large Cap Value Equity eVestment Global All Cap Growth Equity eVestment Global All Cap Core Equity eVestment Global Large Cap Core Equity eVestment Australian Equity Shares - Long Only

22

Universes With Largest Changes In APAC Investor & Consultant Interest

Source: eVestment Advantage – Q4 2019

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% eVestment Global Credit Fixed Income Macro - Multi-Strategy eVestment US Small-Mid Cap Growth Equity eVestment US Sector Focus Equity eVestment Global Small-Mid Cap Equity eVestment Canadian Large Cap Value Equity eVestment US Securitized Fixed Income - Non-Traditional eVestment US Large Cap Value Equity eVestment Global All Cap Growth Equity eVestment Australian Equity Shares - Long Only

23

Mandate Trends

PUBLIC + ANONYMOUS SEARCHES PUBLIC SEARCHES ONLY

Private Equity 25% 41% Equity 29% 12% Fixed Income 14% 6% Real Estate 13% 16% HF / Multi Asset 7% 8% Real Assets 7% 7% Private Debt 6% 11%

Mandate Searches

9 7 5 5 5 5

Source: eVestment Market Lens Q4 2019

25

Finding Opportunities

Largest Allocation Imbalances – Implying Future Flows

Source: eVestment Market Lens ($B)

($50) ($30) ($10) $10 $30 $50 $70 Cash & Overlays Total Fixed Income Other Assets Public Equity Hedge Funds/Abs. Return - Alt Private Equity - Alt Multi-Asset Natural Resources - RA Infrastructure - RA Alternatives (Blend) Alt Private Markets - Alt Alternatives Real Estate - RA Real Assets (Blend) - RA Total Real Assets

RA rolls into Total Real Assets Alt rolls into Alternatives

US Plans UK Plans

27

$54B USD In Demand For Public Equity

Source: eVestment Market Lens

Implied Gross Inflow $53.8B

Implied Gross Inflow (inside allowable range)

Implied Gross Outflow $77.2B

144

U.S. public plans under allocated to public equity

226

Potential individual mandates

54

U.S. equity opportunities

38

EM equity opportunities, one over $1B

11

Plans widely under-allocated by $18M

• $70
• $50
• $30
• $10

+$10 +$30 +$50 Public Equity

Implied Gross Inflow $53.8 billion Implied Net Flow

• $5.3 billion

Implied Gross Outflow $59.0 billion 28

Identify Opportunities By Tracking Under Allocations

Source: eVestment Market Lens

0% 5% 10% 15% 20% 25% 30% 35% 40% 0% 5% 10% 15% 20% 25% 30% 35% 40%

Target Allocation (%) Current Allocation (%)

U.S. Equity International Equity Emerging Markets Equity Investor: Eastern state public plan Plan Size: $10 billion Opportunity: 4.5% underweight US Equity $460 million potential mandate

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Claire Spencer clairespencer@evestment.com

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