Financial advisers bullish on UK equities for 2014, says Skandia
Financial advisers have predicted that UK equities are the asset class most likely to deliver the best investment returns during 2014, according to a recent conducted by Skandia.
Over a quarter of the advisers surveyed (27 per cent) have sighted UK equities as the asset class most likely to perform well over the year.
This was followed in popularity by global specialist equities selected by 15 per cent of respondents and North American equities, selected by 14 per cent of respondents.
The positive sentiment towards equities is likely to be a response to the growth experienced in financial markets during 2013 and the resulting rise in investor confidence. However, it is the developed markets that have come out on top in this year’s predictions with emerging market equities coming in fourth place.
In contrast, lower risk asset classes came out as the least popular choice for next year. Two fifths (40 per cent) of respondents selected cash as the least likely to deliver results, closely followed by gilts, which was selected by nearly a third (30 per cent) of advisers.
Whilst underlying confidence in the UK economy is evident, advisers are concerned about the effects rising interest rates could have on economic stability. This was selected by 29 per cent of advisers as their biggest concern. Rising interest rates would not only impact business confidence and markets but act as a double blow for investors by potentially limiting the amount they are able to invest whilst mortgage and other loan costs rise. However, rising rates is most impactful upon the bond markets, as rising interest rates will negatively impact bond values and are often the catalyst for higher inflation. These factors may be the reason why advisers are leaning more towards equities than to other asset classes at this point in the UK recovery cycle.
Alistair Campbell, head of investment marketing at Skandia, says: “Financial advisers are clearly confident that equities will continue to deliver over the next year and we can expect to see this reflected in sales trends during the year.
“Looking forward there are still concerns about the stability of the economy and how it will impact investment decisions and confidence, however, the general outlook for 2014 is looking more positive than it has done for the last few years. It is always important to consider individual circumstances, long-term goals and risk tolerance before investing in any asset class.”
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