Meanwhile, the FTSE 100 has become much more volatile relative to other asset classes in the past fortnight.
The FTSE 100 Index has a fixed FE Risk Score of 100 and the volatility of other markets, funds and instruments are scored against it. At the end of July 2011, 15 out of 33 IMA sectors had a risk rating over 100, illustrating that they were riskier than the FTSE 100. By 12 August 2011, just 11 sectors scored more than 100.
Between 29 July and 12 August, the FE Risk Scores for just two sectors rose; IMA UK Smaller Companies' score increased to 100 from 86, while IMA Sterling High Yield was hiked to 42 from 33. The IMA Cautious Managed sector's rating remained unchanged at 43 and every other sector's score declined. The average change in a sector's FE Risk Score was a fall of 11.6%.
Scores are recalculated weekly on a rolling three-year total returns basis, with all returns rebased to Sterling. Older values carry less weight, so the scores are responsive to recent events.
Matthew Surfleet, Commercial Director, explained: "All this shows that presently the FTSE 100 is one of the worst places to be invested and if trends continue there will shortly be few sectors exposed to more risk.
"The most surprising results are seen in the recent scores for emerging markets, which are generally considered to be risky investments. The IMA China/Greater China sector has fallen from a rating of 129 at the end of July to 109. Global Emerging Markets has declined from 115 to 106 - almost at par with the FTSE 100. Similar patterns are seen in the Asia Pacific and Japanese sectors."
The more cautious sectors such as those containing gilts, bonds and cash have unsurprisingly seen their risk rating fall dramatically in the past fortnight. The FE Risk Score for the Sterling Corporate Bond sector fell to 23 from 31 in the two weeks ended 12 August 2011, while Global Bonds declined to 35 from 49.
At the other end of the spectrum, the most volatile sector as of last Friday was IMA European Smaller Companies scoring 130, while IMA Europe Excluding UK was rated at 124. IMA North America Smaller Companies had an FE Risk Score of 123, but the IMA North America sector was deemed less risky, at 101.
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