View more on these topics

Investors tap into global growth plays through UK companies

Investors have endured months of uncertainty because of eurozone debt fears and the FE AFI aggressive index rebalancing shows that panellists have favoured allocations to domestic companies rather than those abroad.

Several events tested investor resolve between the index rebalancing in May and November.

Greece is at the root of the problems in Europe. Having already received two bailouts, it became apparent the country needed more money and a substantial restructuring of its debts so that it could continue meeting its commitments.

In October, when European politicians seemed to have finally sealed an agreement that would provide an opportunity for Greece to restructure its debt, Greece’s prime minister George Papandreou unexpectedly announced he would take the proposals to his electorate in a referendum.

However, other fears are adding to investor woes. Italy, which has been looking fragile for much of this year, saw its cost of borrowing reach crisis levels several times over the past few months. Last week, 10-year government bond yields reached upwards of 7 per cent.

During times of worldwide volatility, home opportunities are usually more appealing as they are perceived to be a cautious stance. However, the shift towards domestic stocks does not show signs of being a purely UK play, according to FE AFI panellists.

Whitechurch Securities head of research Ben Willis says: “There are some globally focused companies based in the UK so it could be a global growth play while returning to the perceived safety of home companies.”

UK equity allocations in the aggressive index have been rising steadily since May 2010, up from 25 per cent to 29 per cent.

During the 2011 rebalancing, UK equity allocations increased by one percentage point. During the same period, global equity weightings have all fallen, with Asia and Pacific weightings dropping from 21 per cent to 20 per cent, European equities down from 12 per cent to 10 per cent and US equities from 14 per cent to 13 per cent.

Regional allocations tell a similar story. Allocations to the UK jumped by four percentage points, from 30 per cent to 34 per cent, while allocations to the rest of the world fell from 70 per cent to 66 per cent.

Conversely, of the top five most highly ranked funds ejected during the latest rebalancing, three were UK-related products: Artemis UK special situations, M&G UK select and CF Octopus absolute UK equity.

Meanwhile, the top five funds chosen by the panel were First State Asia Pacific leaders, Schroder UK alpha plus, M&G global basics, GLG Japan core alpha and Neptune European opportunities.

Data supplied by FE

Recommended

1

Cole seeks to limit super-complaints

The FSA says it would support giving consumer groups the right to trigger super-complaints but warns the power should not be given to industry bodies or private law firms. In June, the Government ruled out giving consumer groups the power, which was proposed in consultation documents that informed the draft Financial Services Bill. Giving evidence […]

Drawdown decisions

Daniel Cheeseman, sales manager at Selectapension, analyses the effects of this year’s rule changes on income drawdown

Gunning for growth

Don’t write off emerging markets, they are set for a comeback just like a football team rediscovering their form

Risk-free path to pensions is a myth

Robin Geffen, Fund Manager and CEO Are you taking enough risk? Robin Geffen, Founder of Neptune and Manager of the top performing Global Alpha Fund, discusses the importance of accepting enough volatility in planning for retirement. Click here to read the full article Important information Investment risks The value of an investment and any income from […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com