At a recent investment conference hosted in Athens, 50% of delegates said they had faith in the asset class, which was in line with the results of last year’s survey.
Europe, US and global
A fifth of the delegates said US equities were set to win favour, while over half – 53% – said global equities were the favoured asset class.
The survey of 146 intermediary clients, representing more than 35 countries, revealed that 15% expected emerging market equities to perform well over the next year. While 72% were currently neutral or underweight the emerging economies, over half planned to increase their exposure to EM equities over the next six months, suggesting confidence in the asset class was set to return after this year’s volatility.
Almost three-quarters of the respondents expected to be worrying more about inflation than deflation by 2018, yet only 6% were looking to put any kind of inflation hedge into their clients’ portfolios.
On interest rates, 81% expected US rates to have increased by the end of 2015 while 80% think rates in the eurozone will take even longer to rise.
Schroders said the search for income looked set to continue yet with a volatility shield, as 32% said they were seeking growth without the volatility of equity markets, 28 per cent sought to preserve wealth amid market volatility and 20% were looking for a sustainable income stream.
Therein lies the opportunity
Head of pan-European intermediary distribution Carlo Trabattoni said: “The increased expectations for performance of European equities are in keeping with the results seen in our survey from this time last year, which highlighted a possible turning point in investor sentiment. Despite recent political events in Europe, our equities team is seeing a wealth of opportunities to benefit from the perceived ‘recovery story’ for the European economy, which is consistent with the expectations that clients have for the asset class.”
He said the concerns over inflation were unsurprising given previous survey results but urged investors to apply these concerns to their portfolios.
“We are already seeing increasing client demand for outcome-oriented solutions, rather than benchmark-driven products, that can provide income, growth or preserve wealth in volatile and unpredictable markets, and would expect to see more interest in products that can hedge against inflation as this becomes a more prominent issue,” he added.
