Advisors are shifting away from “home bias” when selecting funds, according to Benjamin Reed-Hurwitz, lead of EMEA Research at ISS Market Intelligence.
He argues that there is a reduced desire to invest more in domestic assets, and that advisors are instead opting for a global approach.
Reed-Hurwitz said:
“The UK stock flow reflects their global performance.”
Reed-Hurwitz’s research focusing on the advice market has seen a move towards a globally ingrained portfolio, he told FT Adviser.
“UK stocks are compared to US stocks or European stocks in terms of their relative value. So, in reality, the relative performance is what really matters,” he said.
“We’ve seen it all over the world and in many markets it’s a global re-anchored of this portfolio, so regional flows are much more determined by relative performance.”
Naturally, UK investors and advisors are seeing the approach the government is takingRegarding advisor preferences between active and passive management, Reed-Hurwitz said there is a rebalancing of blend portfolio across the market.
He states: “I think there are two stories depending on the fund selector and the advisor base.
“One is the confidence of where active and passive is best used, and two, the desire to have a cost-controlled solution.”
Following the March spring statement, Reed-Hurwitz believes the advisors are paying attention to the political message before the budget this fall.
“Of course, UK investors and advisors watch the approach the government takes in terms of encouraging investment, but it also affects household finances,” he said.
“I expect there will be a period of expectation. Whether it’s positive, negative or negative, is likely to be framing that the government gives in advance.”
tara.o’connor@ft.com
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