Investors who have shunned equities recently expected to put money back into the asset, poll and figures indicate

Written by Ray Clancy

Monday, 01 November 2010 11:09

A large number of investors believe that there will be a return to equities within a year as an appetite for this kind of asset, increases, according to a survey.

Some 89% of intermediary clients from across Europe, the Middle East and Central and South America polled at a recent Schroders Investment Conference in London, said they believe that equities will come back again following a significant slow down.

Net equity sales this year fell to €22.7 billion as at 31 July 2010, compared to the recovery of 2009 when equity sales peaked at €112.7 billion.

In a separate question on asset allocation some 69% said that they expect to invest at least 10% of their clients’ assets in absolute return products within two years. This shows an upward trend from the same conference six months ago when half allocated only 5 to 10% of their portfolios in this area.
Following the emergence of UCITS compliant hedge funds, the survey found a favourable shift in attitude. Within two to three years 72% of clients expect to invest in hedge funds through a UCITS structure compared to 38% today. Investment in offshore hedge funds is also likely to fall.

‘Market volatility has damaged investor confidence in the last few years causing them to look for safer havens like fixed income. However, sentiment is turning through the cycle as the global economy recovers slowly resulting in appetite returning to riskier assets, such as equities, in order to capture higher returns,’ said Richard Mountford, global head of intermediary business at Schroders.

‘We are also seeing increased demand for income generating and outcome oriented products, which includes absolute and total return,’ he added.

The expectation on equities already seems to be bearing fruit. Last week, $2.7 billion flowed into US equity funds and $840 million into European funds, according to EPFR, a data provider.

Separate data from the Investment Company Institute showed net flows of cash into equities in the past two weeks for the first time in six months.