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IFAs most favourable towards UK, US and Global equities

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IFAs are currently most favourable towards UK, US and global equity asset classes, according to the latest Baring Asset Management (“Barings”) Investment Barometer.  

Overall, financial advisers are least favourable towards cash (17%) and emerging market debt (14%).
 
Nearly four-fifths (79%) of intermediaries are ‘favourable’ towards UK equities, with 23% ‘very favourable’, the highest of any asset class and ahead of US equities (78%), global equities (75%) and multi asset products (73%). Sentiment towards emerging markets, Asia (excl. Japan) and European equities was lower, in contrast, at 60%, 57% and 53% respectively.
 
Barings’ research found that almost half (45%) of IFAs said they were ‘favourable’ towards fixed income, an increase from 41% in the same quarter last year 2, with 16% saying they are ‘very favourable’ (up from 9% for Q1 2014). One in seven (15%) said they were recommending clients increase exposure to fixed income (compared to 13% in Q1 2014).
 
Rod Aldridge, Head of UK Wholesale Distribution at Barings, says: “Despite the strength of economies such as the US and UK, it is clear that significant uncertainty remains in key markets and towards major asset classes. For this reason, sentiment towards multi asset and fixed income products has increased and there is a chance that trend could continue as volatility remains, particularly in light of political developments across the world.”
 
Barings’ research, which canvasses UK financial advisers on a quarterly basis, found IFAs were most concerned about Eurozone growth problems, with 78% of respondents citing it as the biggest global macro-economic challenge – up from just 28% in Q1 2014 and 71% in Q1 2013 3.
 
Nearly half (46%) cited over-leveraged economies’ inability to reduce debt as a significant concern while the same number (46%) cited the situation in Russia. Around two-fifths (39%) referred to falling oil prices and 38% cited general political uncertainty. The threat of slowing growth in China, however, has abated slightly, down from 58% in Q1 2014 to 40% in the latest Investment Barometer survey.
 
Aldridge says: “Overall we believe that the year ahead should be better than last year, barring any systemic shocks.  Barings believes that investment opportunities will continue to improve in Japan and we are now more positive on the outlook for Europe based on a high dividend yield, negative interest rates on many bonds and earnings improvement from the cheap euro.  Additionally we expect emerging markets to grow at a decent pace, though growth has been under pressure in some markets and the strong US dollar does represent a threat to prosperity.”
 

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