The IMF is over her for the next two weeks on an annual pilgrimage except this time Christine Lagarde, the IMF’s managing director, is happily to tell our own Chancellor that his austerity plans are not working.
The US/French-owned rating agency Fitch doesn’t like the UK, downgrading it last month to AA+. US-owned Moody’s lowered its UK government rating in February.
The UK is good enough for one particular central bank governor to move from Ottawa to take control of the Bank of England, but, through the Financial Times last week, the investment chief of the $129.5bn (£83.5bn) Ontario Teachers’ Pension Plan, feels the need to tell us which infrastructure projects to prioritise.
As has been the case since 1973 when we first joined, another political debate of the moment is Britain’s future in Europe with two former Chancellors, Dennis Healey and Norman Lamont, both saying Britain should pull up the drawbridge.
Alongside all this noise, investors are following suit and falling out of love with the UK. This withdrawal, however, is no bad thing.
Looking at the IMA stats, the UK All Companies sector has been the worst performer for eight of the past 12 months. In February alone, net retail sales of UK equities showed outflows of £427m, an average net outflow of more than £50m every month throughout the previous year.
Even those funds in the UK All Companies sector are shunning UK equities, with 5% of all money across all 284 funds held in cash, up from 0.17% at the end of March.
Meanwhile, specific funds have also broadened their remit. Find out which ones here.
Taking one of the biggest funds in the sector as an example, the £7.4bn M&G Recovery Fund has money invested in Europe, the US, Australasia and South Africa.
Taking a look at a family office proposition, the Iveagh Balanced Portfolio has 42% in equities and just 5.6% of that is in the UK.
Another example – one of the biggest multi-manager propositions out there is run by John Chatfeild Roberts and his team at Jupiter. He has between 15.6% and 33% in each of his Merlin Balanced, Conservative and Growth portfolios in UK equities but tellingly in his Jupiter Merlin Worldwide Portfolio he has more cash than he does UK equity assets – and he only has 0.6% in cash!
At long last, UK investors are doing what some of the fund management groups have been doing for a long while and leaving their home bias to one side. SWIP, Martin Currie – echoed again last week by the firm’s departing head of UK intermediary business, Alan Burnett – and Aviva Investors have all changed their entire investment strategy to favour overseas equities at the exclusion of the UK.
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There are still some great UK fund managers out there – the FTSE 100 is up nearly 15% this year – so there are still plenty of opportunities at home. But when the Nikkei 225 is up 42% so far this year and with the dollar strengthening, there are even more reasons to look to a broader universe.
The Queen may be spending less time overseas, but there is no need for investors to be doing the same.
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