Willis Owen’s latest survey of almost 1000 investors has revealed that over a third (38%) plan to increase their exposure to Asia and emerging markets over the next six months. The majority (41%) equally expect to increase their US exposure but will reduce allocations to European and UK markets as Brexit negotiations continue.
Over half (55%) of investors anticipate a stock market dip within the next six months with 59% predicting a fall in the region of 5.1-15%. Brexit uncertainty has been cited by 71% as the primary reason for the fall, with 41% and 37% citing increased political risk or a UK recession respectively as the most likely contributors. In response to this, 42% plan to reduce their UK equity and bond exposure and 25% will increase their cash allocations before April 2019.
Despite anticipating a market fall, nearly two thirds (59%) say their confidence in the UK stock market will either ‘remain the same’ (26%), ‘increase slightly’ (25%) or ‘increase significantly’ (8%) next year. Almost half (46%) perceive the dip as a ‘market correction’ which will prove to be a good long-term investment.
Of those surveyed, 100% regularly invest in stocks and shares, 75% invest in ISAs, 64% in pension schemes and 22% invest in crypto currencies. In terms of demographic, the majority of respondents (61%) were male and 39% were female. Investors aged between 25 and 44 accounted for over 60% (63%) of responses and 34% were aged 64 or over while just 35% were aged between 18 and 24.
Adrian Lowcock, Head of Personal Investing, Willis Owen says:
“The biggest surprise is the continued rise in popularity of crypto currencies. These should not yet be considered a mainstream investment. They incredibly risky and there is lack of regulation and yet over 1/5th of investors are thinking of investing in them.
“That Brexit is putting off investors is a dominant trend across both professional investors and retail investors and is reflected in industry wide data. However, investors should think longer term when considering their portfolio’s. The UK along with Emerging Markets look good value for long term investors.
“The industry clearly still has some way to go in terms of appealing to female investors as well as a younger demographic who may perceive investing as something that is more appropriate for those approaching or at retirement. At Willis Owen, we have developed ‘Play’; a safe and easy to use online tool designed to introduce and educate novice investors on how, when and why to invest.”
“For investors looking to invest more in emerging markets next year, our top fund picks are:
Fidelity Emerging Markets - The fund invests in companies with superior business models that demonstrate strong and sustainable profitability and a consistent track record over time. Manager, Nick Price, is looking for confirmation of quality through superior and sustainable return on assets, strong and unleveraged balance sheets, track record and valuation. Price prefers self-funding businesses which treat shareholders fairly. He is also interested in companies with long term growth potential where reinvestment in that growth delivers a high rate of return. Holdings are sized based on these aspects and the portfolio manager’s view.
Lazards Emerging Markets - The team focus on firms with improving financial productivity that haven't been widely recognised by the market. The investment universe is filtered based on valuations and from that shorter list the analysts carry out detailed research to understand the drivers of a companies' profitability. They pay particular attention to cash flow and its impact on the balance sheet, and consequently
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