UK equities are viewed as “extremely cheap” by 97% of wealth managers, financial advisers and financial planners, with over 80% anticipating an increase in allocation over the next three years, according to new research by Rathbones Asset Management.
The industry is expecting to see an influx to the sector in both the short and long term, with 88% believing UK retail investors will increase allocations in the next six months, and 81% believing this trend will continue over three years. No respondents claimed that allocations would fall from where they are now.
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However, while 90% of those surveyed expected increased allocation to UK large caps, only 53% expected an increase for UK small caps.
A possible motivation to turn towards UK equities is the British ISA, introduced during the Spring Budget of 2024, which would provide tax incentives for investments in the UK. This is expected to be a £5,000 allowance towards UK companies in addition to the £20,000 currently allowed per year.
About half of respondents believed between 25% and 50% of their clients would make use of the policy, while most others estimated between 10% and 25%. Almost all believed the British ISA would help equity valuations at some level.
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Jayne Rogers, Chief Distribution Officer at Rathbones Group Plc, said: “Regardless of the result of the upcoming General Election, we are seeing positive sentiment about investing in the UK. It remains to be seen if, and how, the British ISA is implemented but it is still hugely positive that there is an 88% increase allocation to the UK forecasted in the next six months, showing conviction.”
