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17/08

Investors missing out on above cash returns

Investors seem to be suffering a crisis of confidence, desperately trying to find a safer haven for their investments when, in fact, it would have paid off to retain their investment choices. This is according to analysis into money movements within its offshore products* by Skandia International, the offshore business of Old Mutual Wealth Management.

17 August 2012

Investors seem to be suffering a crisis of confidence, desperately trying to find a safer haven for their investments when, in fact, it would have paid off to retain their investment choices. This is according to analysis into money movements within its offshore products* by Skandia International, the offshore business of Old Mutual Wealth Management.

Despite the busy movements in and out of asset classes, based on returns alone, most investment decisions would have paid off during the first half of 2012. However, investors have remained cautious, choosing to move money away from equities.

Mixed asset funds, Indian, Asian and, not surprisingly, European equities proved unpopular in the first half of 2012, as did Commodity funds – although demand for physical Gold has seen a strong return in June. Both, the UK and Global property sectors have seen steady outflows too, indicating investors are feeling nervous about the state of property markets, despite steady returns thus far into 2012.

Yet the chart below illustrates that all but two – Commodities and Energy, sectors that saw significant outflows during the first half of this year had, in fact, delivered positive returns over and above what can be achieved on cash deposits. Moreover, six out of 17 would have rewarded investors with higher returns than their favourite bet, Fixed Interest – albeit with higher volatility.

Sectors invested into during H1 2012

Fixed Interest has remained the asset class of choice for most although North American equities stayed in favour for the second consecutive quarter in Q2 2012. Latin America, Global and Russian Equities, as well as some of the more specialist equity sectors such as Technology and Health also benefited from slightly higher investment levels during the first half of this year.

This evidence backs up the opinions of overseas advisers polled in the latest international Adviser Confidence Survey**, that investment opportunities can currently be identified across most investment sectors, with as many as 20% believing that every sector represents a buying opportunity at present. The study also showed that over the coming months, advisers expect the best returns to come from equities – in particular North American and Emerging Markets. Interestingly, only 9% of those surveyed believe Fixed Interest and Gold to be a good long term bets.

Phil OxenhamPhil Oxenham, marketing manager at Skandia International comments:

‘What is evident from this analysis is the fact that investors are still nervous about investing, trying to identify a safe haven where they could at least preserve, if not grow, the value of their investments. It is encouraging to see demand for equities emerging – and clearly investors have a higher conviction in North American equities than in other equity sector. However, the most significant finding is the fact that international advisers are feeling upbeat about the prospects of investing, with as many as a fifth believing that investment opportunities exist in all sectors at present. Although short term volatility may persist for a little while yet, this is no longer a phenomenon but rather a new reality which investors should take in their stride and, with advice from their financial advisers, use to their full advantage’.

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