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Schroders: investors look to equities
26 February 2014
Report reveals dramatic increase in investor confidence in developed markets
Investors plan to turn to equity markets in their search for growth this year, according to a new report by Schroders.
Some 70% of investors globally said they were looking to invest in equities, while 82% said they were seeking to maintain or increase the amount they invest and save in 2014.
In comparison just 18% will look to invest in fixed income, and 8% said they would keep money in cash.
The report findings come as no surprise given that the bond markets have had a rocky ride on the back of concerns over tapering of quantitative easing in the US. Dwindling interest in fixed income has led to growing investor appetite for equities.
Investors globally are looking to invest in developed economies as these are perceived to provide more stable returns and the best growth opportunities, according to Schroders. Confidence in developed markets has spiked since the asset manager’s 2013 report, with 27% of investors now looking to Western Europe, and 31% expecting the US to provide strong growth prospects.
Emerging markets on the other hand have seen outflows of capital as US tapering draws investors back into the US treasury market.
While Asia Pacific – including Japan - is still the top region for investors in terms of expectations of strongest growth, with 39% preferring the region, this is a 7% decrease from last year.
Massimo Tosato, executive vice chairman, Schroders, said the trend towards equities is not without challenges in 2014.
“Despite positive news from some countries, global GDP growth remains lower than expected, when compared to recovery rates from previous recessions. This growth will not be uniform across sectors, economies or regions, particularly given that significant weakness remains in some Eurozone countries, and also in emerging markets where the withdrawal of QE is weighing heavily on stock markets. We are in a still transitioning global economy and taking an active investment approach remains key for investors.”
Fewer investors (41%) plan to buy equities in their home countries this year, while the majority are looking outside their domestic markets. Half of last year’s respondents were looking to invest in their home markets.