Tuesday, April 25, 2017
Politics is greatest risk, but over a third of UK IFAs see Brexit as an investment opportunity
- Almost three-quarters of UK IFAs (74%) consider politics to the biggest investment risk on the horizon
- Yet, over a third (35%) say the majority of their clients regard Brexit as an investment opportunity
- More than four fifths (81%) of UK IFAs think that the global economy will stay the same or strengthen over the next twelve months
- 76% believe equities will deliver the best returns over the next year
Almost three-quarters of UK IFAs (74%) view geopolitical events as the greatest investment risk in the short-term, in a survey of over 100 advisers at the annual GAM UK IFA roadshow. Further political threats raised were the upcoming European elections, the collapse of the EU, and the political landscape across China, Russia and the Middle East.
However, in spite of this, 35% of UK IFAs said Brexit presents more of an investment opportunity than a threat for their clients, and nearly a quarter (23%) view Donald Trump’s presidency in the same light for their clients.
The survey also showed that UK IFAs are broadly optimistic about the year ahead, with more than four fifths (81%) stating that the global economy will stay the same or strengthen over the next year.
For 76%, equities will be the key driver of returns over the next twelve months, with emerging market assets taking second place.
Further findings show that market volatility has had no effect on client relationships for nearly half (45%) of UK IFAs so far, and only 13% said clients had requested changes to their portfolios as a result of recent market moves.
Charles Hepworth, investment director at GAM responsible for developing and managing outsourcing solutions for UK IFAs, said: “As the results of the survey demonstrate, politics continues to be a key concern for investors in 2017. European equities have been an overweight in our portfolios over the past year, and we have gradually trimmed exposure to a broadly neutral weight to lock in strong performance ahead of the French and German elections. We are positioned underweight to UK equities as a great deal of uncertainty surrounds the UK’s exit from the EU.
“We share the view that equities will be a key driver of returns in the year ahead, and our portfolios are positioned as such. We are currently overweight equities and alternatives, in particular property related securities and gold in the alternative space. We remain underweight to traditional government bonds. Those bonds that we do hold are of lower duration and concentrate on selected areas in credit, including mortgage backed securities, emerging market debt and junior debt of financials. Asian and broader emerging market equities have recovered strongly on the back of improved fundamentals and are a key overweight in our portfolios.”
The annual GAM UK IFA roadshow hosted more than 100 IFAs in Durham, Harrogate, Knutsford, Southampton, Guildford, Chepstow and Birmingham during March.
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GAM is one of the world’s leading independent, pure-play asset managers. It provides active investment solutions and prod¬ucts for institutions, financial intermediaries and private investors, under two brands: GAM and Julius Baer Funds. The core investment business is complemented by private labelling services, which include management company and other support services to third-party institutions. GAM employs around 1,000 people in 12 countries with investment centres in London, Cambridge, Zurich, Hong Kong, New York, Lugano and Milan. The investment managers are supported by an extensive global distribution network.
Headquartered in Zurich, GAM is listed on the SIX Swiss Exchange and is a component of the Swiss Market Index Mid (SMIM) with the symbol ‘GAM’. The Group has assets under management of CHF 126.9 billion (USD 126.8 billion) as at 31 March 2017.
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is no indicator for the current or future development.