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Investors see opportunities in equities
19 August 2013
Two thirds of investors see shares as most appealing over next 12 months
Almost two thirds of investors think equities will be the most attractive asset class over the next 12 months, according to a new survey.
Some 62% said equities would be the most appealing asset class over the next 12 months, up from just 35% a year ago. The survey was carried out by MHP Financial.
Investors were far less attracted to fixed income, with just 5% citing it as the best opportunity – down from 18% in 2012.
A third of investors said emerging market equities were the most attractive EM asset class for investment returns, up from a fifth last year, with support for EM debt falling from 17% in 2012 to 7%.
Overall, the vast majority of investors (86%) said leverage would be necessary to achieve their goals, while more than half (58%) said that having ‘skin in the game’ - or co-investing alongside clients to align incentives - was a good idea and would improve investment performance.
Sally Todd, managing director at MHP Financial, said: “This year’s survey reveals a notable upturn in investors’ appetite for equities, including emerging market equities, along with a broader acceptance that some element of leverage is essential if investors are to meet their targets, and that taking too little risk can also be a long-term problem.
Less than 15% of respondents thought any leverage is unjustifiable.
“The impression given is that investors while all too aware of the ongoing vulnerability to the possibility of harmful impacts from external shocks and EU regulation, are nonetheless developing an appetite for “riskier” assets and prudent leverage in order to meet their goals.”
The survey also found fears over the UK's vulnerability to financial shocks, with nearly two thirds (65%) concerned about systemic risk.
More than half (54%) thought EU regulation was biggest threat to the UK financial services industry, with regulation unsurprisingly one of the major issues that worried investors.
The survey also found about half (48%) of investors thought multi-strategy asset management companies would be the most successful in the next 12 months.