On top of both of these worries intermediaries are increasingly predicting the UK will experience inflation over the next three years, with 55% of advisers expecting it – a 12% increase on three months ago.
These views were revealed as part of Barings’ quarterly investment barometer, asking intermediaries for their attitudes towards the current economic environment and major asset classes.
Stagnant or negative UK GDP Growth was seen as the biggest challenge by 31% of respondents, up 11% since September’s barometer.
Rod Alderidge, head of UK retail distribution at Barings, said: “As we enter 2013, macro-economic concerns continue to be at the forefront of financial advisers’ minds. This is understandable, with economic predictions suggesting the year ahead could be testing.”
In terms of asset allocation, emerging market equities are deemed by around 90% of advisers as having ‘very favourable’ or ‘quite favourable’ opportunities for investors at the moment.
Asian ex-Japan equities were also considered attractive by approximately 90% of the adviser pool.
In line with this, around 60% of intermediaries said they were advising clients to increase exposure to EM equities, with only 6% suggesting a decrease and 30% not advising changing.
Meanwhile Japanese equities have still not shaken their unfavourable image, with 72% of advisers viewing them as either ‘quite unfavourable’ or ‘very unfavourable’.
It also appears after last year’s bumper inflows fixed income will see a reversal in fortune with 46% recommending decreased exposure to the asset class, 36% advising clients do not change their exposure and only 16.6% advising an increase in fixed income.
