Many EMEA ultra-high net worth investors (39 per cent) continue to believe equities will be the best performing asset class over the next 12 months, according to JP Morgan’s Spring Private Client Survey.
Despite on-going global uncertainty, investor sentiment has remained largely unchanged since the winter Private Client Survey, but with increased volatility expectations for 2019, many investors are now beginning to adopt a more defensive investment approach.
A third of the ultra-high net worth clients surveyed (33 per cent) are investing in higher-quality assets to help them to position their portfolios more defensively, whilst a quarter of investors (24 per cent) are moving from heavily cyclical sectors to focus on long-term investment opportunities in industries such as healthcare and technology. A further fifth (20 per cent) are moving to invest in actively defensive sectors such as utilities, real estate and telecoms.
“Like many of the ultra-high net worth clients we surveyed we’re also mostly positive on equities for 2019, which is reflected in our overweight allocation of equities in managed portfolios,” says Oliver Gregson, Head of the UK & Ireland markets for the JP Morgan Private Bank. “As we enter late cycle investing, we see a movement from cyclical growth sectors to greater exposure to secular growth stories. The technological revolution isn’t slowing down, while the healthcare sector has enjoyed consistently positive earnings growth over the past 20 years.”
“As markets increasingly reflect the strains associated with an ageing economic cycle, we are de-risking,” Gregson says. “We liken this process to calibrating the right mood with dimmers, rather than simply flipping a switch from on to off. Within and across asset classes we’ve taken full advantage of the dimmers available to us to ensure that the appropriate level of risk is being taken. However, whilst our expectation for growth to slow merits this caution, we believe it is still too soon to shift to a fully defensive posture. That view, along with others, will certainly evolve as 2019 unfolds.”