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29/11

North American equities top the offshore investment trends year to date

The volume of money invested into North American equities has surpassed all other fund sectors during the first ten months of 2012, according to data from...

29 November 2012

The volume of money invested into North American equities has surpassed all other fund sectors during the first ten months of 2012, according to data from Skandia International, the international product provider of Old Mutual Wealth.

The company’s analysis into money movements between funds available for its offshore bonds shows that, for the best part of the year (January – October 2012), international investors have been removing money from Cash, Emerging Markets and Commodity funds in favour of North American equities. Specialist funds such as Technology, Health, Russian and Latin American Equities also proved popular. Whilst the previous front runner, Fixed Interest, continues to remain in favour, there are signs that appetite for bonds may be starting to weaken. Money invested into the Global Bonds has remained stagnant between July and October, although demand for UK Fixed Interest – High Yield and Inflation Linked bonds in particular, as well as Emerging Market Debt funds has seen a moderate increase over this period.

Cash has continued to remain the most unpopular investment so far this year, indicating investors are, perhaps, starting to accept the need to take on equity risk in order to seek above cash returns. Funds investing in Asian Equities, India, China and less surprisingly, European Equities, have also experienced outflows, likely due to the ongoing heightened volatility of these asset classes. Investor sentiment on Commodities seems to be split, with physical gold still strongly favoured over resources and energy funds, which have seen money switched out over the period.

Interestingly, according to the latest International Adviser Confidence survey*, the opinions of international advisers on Gold itself seem to be divided. Respondents from Hong Kong and the Middle East believe the metal will remain highly attractive over the next three months. At the same time, advisers in Singapore, Europe and the UK voted in favour of equities as the asset class they are most likely to recommend for inclusion in their clients’ portfolios over the shorter term.

Phil OxenhamPhil Oxenham, marketing manager at Skandia International comments:

'Earlier this year we predicted that the ‘wall of money’ – the consequence of high Cash holdings built up over the previous months, would start pouring into equity funds. It appears this prediction has, in part, come true, as cash holdings within our offshore bonds are now at an all year low and investors are opting for North American equity funds in particular.

'However, given the significant proportion of money still invested in Fixed Interest funds, it appears investors are lacking the confidence that stock market volatility may be coming to an end any time soon. Fundamentally, despite the prevailing weakness, global stock markets are, at present, highly undervalued and underinvested. This provides the perfect opportunity to boost the equity holdings within portfolios in order to benefit from their growth over the longer term.'

* The quarterly international adviser confidence barometer was conducted by Skandia International, part of Old Mutual Wealth, in Q3 2012 and attracted responses from 348 advisers from around the world – Hong Kong, Singapore, UAE, UK, Europe, Africa, Latin America and Thailand.

This press release is for journalists only and should not be relied upon by financial advisers or customers.