IFAs predict return to Stock Market in 2010

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Written by Ray Clancy

Tuesday, 02 February 2010 10:20

Financial advisers are predicting a significant return to the stock market in 2010, with almost three quarters expecting an increase in the number of clients looking to invest in equities over the coming months, according to new research.

A good performance by the markets in the second half of 2009 along with the fact that low interest rates are not good for savers is encouraging people to look at stocks again, says the research commissioned by Prudential.

While Independent Financial Advisers predicted a strong return to the stock market in 2010, they also believe that investors will look to adopt a more cautious approach on the back of the worst recession since World War II.

Almost 73% of IFAs expect clients to invest in cautious managed growth funds, with 66% expecting to see investment in defensive funds and 70% believing investors will also look to spread risk by buying into multi-manager funds.

In addition, more than half, some 55%, of IFAs expect clients to invest in absolute return funds and 68% predict ongoing investment in bonds.

In contrast, just 18% expect to see clients looking to invest in individual stocks and shares and less than half, 46%, expect clients to invest in higher risk growth funds.

Andy Brown, Director of Investment Funds at Prudential said it was not a huge surprise that IFAs expect to see more clients looking to return to the stock market and buy into equity based investments in 2010.

‘However, in reality not all equities will show equal growth over the coming 12 months and choosing the right time to invest in the right asset classes is key. We share the views of the IFAs surveyed and believe that good fund managers and balanced portfolios will do well in 2010 and beyond as investors look to build portfolios to deliver both performance and greater security,’ he explained.

The survey also found that 71% of IFAs believe the recession will have a long term impact on the way clients look to invest and prompt them to adopt a more cautious investment strategy and be therefore be more reliant on professional advice.