Bringing you live news and features since 2006 

European flags
European flags

Schroders’ survey reveals renewed interest in European equities


European equities are currently seen to be one of the most attractively valued asset classes, according to a survey of intermediary clients from Europe, the Middle East, the US and Latin America at a recent Schroders investment conference in London.

Some 41 per cent of those surveyed intend to increase their clients’ asset allocation to this sector by the end of the year. This was supported by an increased appetite for risk as, by the end of the conference, almost three-quarters (72 per cent) stated that they had already re-risked their clients’ portfolios, or would expect do so within the next six months.

The survey also reaffirmed the continued search for income in this current low yield environment, with more than three-quarters (77 per cent) stating that the minimum yield that they would accept from an equity yield fund would be between three and five per cent. In addition to this, 63 per cent would prefer a variable yield with the scope to achieve between four and seven per cent, while 23 per cent would be happy with a fixed distribution of five per cent.

With regards to the US, nearly two-thirds (64 per cent) believe that the risk of the fiscal cliff has been fairly priced in to risk assets, assuming that the worse case scenario does not play out. In the event of the worst case scenario, only five per cent are confident that the market is aware and fairly priced. Despite this apparent confidence towards the pricing of risk assets, 21 per cent of those surveyed felt that the US economy may not be as healthy as many believe and only nine per cent viewed US equities as sufficiently attractive in valuation to increase clients’ asset allocation over the next quarter.

Opinion on quantitative easing was somewhat divided – while 16 per cent saw QE as having had a positive effect, over half (52 per cent) believed that, while this may have been the case in the past, recent rounds are having a diminishing effect. Conversely, a quarter (25 per cent) saw no positive effects, but felt that QE is likely to lead to an inflation problem in the long-term.
Peter Beckett, head of international marketing at Schroders, says: “Despite ongoing uncertainty across Europe; this survey has highlighted a possible turning-point in investor sentiment towards European equities and risk assets. With valuations looking particularly attractive at the moment, this could indicate that the time for a re-entry to risk assets may be upon us. This is consistent with our survey from earlier this year, whereby investors asserted that they considered equities to be the most important asset class for the rest of the year. This year’s results also indicate that while client demand for income prevails, the appetite for risk has increased in the past six months. Elsewhere, investors are showing caution towards the US, considering uncertainty surrounding the health of the economy and the as-yet unresolved fiscal issues.”

Latest News

ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..
Investors urgently need greater access to diversified investment strategies aligned with the Paris Agreement on climate change if the world..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by