31 May 2012
International investors have been fleeing cash funds during the first four months of 2012 and looking for buying opportunities in depressed equity markets, according to Skandia International’s analysis of money movements within its offshore products*.
Cash and Money Market funds accounted for nearly half of the amounts moved out since January through to the beginning of May, with over a fifth being removed from Mixed Asset funds. Over 7% of money switched out was from Commodities, specifically gold funds, perhaps signalling that investors are now becoming seriously concerned that the price of gold may finally be reaching its all time peak. Asian Equities, including Hong Kong, India and China equities, also proved fairly unpopular accounting for a combined 12% of outflows. This came as a slight surprise, given that the Asian markets demonstrated a fairly robust performance over the period, albeit with the heightened volatility which is fairly typical for the region.
It has been good news, however, for US and North American equities, which took in a third of new investments over the first four months of this year. Investors allocated a further 28% to Global Fixed Interest funds, with the rest of new investments going into Technology, Latin America and Russian Equities. UK and Emerging Markets fixed interest funds also saw positive, although modest, inflows.
The data backs up the findings from the most recent Skandia International adviser confidence barometer survey**, which established that North American equities were voted as the sector most likely to be favoured by advisers for their clients’ portfolios over the next three months.
Emerging Market equities and Asian equities were voted as the next most popular choices considered by advisers as having the potential to offer attractive returns.
Phil Oxenham, marketing manager at Skandia International comments on the findings:
“The findings are interesting and illustrate that the wall of cash built up as a result of the nervousness investors have been experiencing in recent months is, as predicted, now being directed into equities. The ongoing and potentially worsening turbulence in the Eurozone is perhaps making investors feel that North American equities may be a safer option – not that an ocean is enough to remove the risk of global contagion completely. Clearly the nervousness has not yet totally subsided, as a significant proportion of new money is still being invested into Fixed Interest funds, but this also demonstrates that clients are becoming increasingly aware about the importance of diversification and how it can help keep portfolio risk in check.”
* The analysis is based on funds comprising Royal Skandia’s unit linked fund range.
** The offshore adviser confidence barometer was conducted by Skandia International in Q1 2012 and attracted responses from 445 advisers from around the world – Hong Kong, Singapore, Dubai, UK, Europe, Africa and Latin America.
This press release is for journalists only and should not be relied upon by financial advisers or customers.