The UK remains advisers top region of choice this year in spite of concerns about the impact of the upcoming general election, according to research from Cofunds.
Over a quarter (28 per cent) of advisers polled by Cofunds said the UK was their geographical region of choice for the year. About half of the advisers (49 per cent) said their clients are optimistic about the UK’s outlook.
This comes as figures from the Office for National Statistics (ONS) showed UK GDP grew by 0.3 per cent in the first three months of 2015.
This was lower than the 0.6 per cent growth seen in the previous quarter and lower than the 0.5 per cent growth predicted by economists.
However, experts doubt this is the start of a long term slowdown. Vicky Redwood, chief UK economist at Capital Economics said: “We doubt that the recovery is on the cusp of a sustained slowdown...the business surveys remain upbeat and consistent with quarterly GDP growth returning to 0.7 per cent or 0.8 per cent quarterly rates soon.”
Still, the coming week is expected to be volatile for the UK markets ahead of net week's general election. Cofunds’ research showed over two thirds (67 per cent) of advisers are concerned about the upcoming elections.
In spite of the UK’s popularity, Stephen Wynne-Jones, head of marketing at Cofunds said: “We’ve noticed that investors have started stemming their flows into UK funds, for the time being at least, until the general political instability is resolved.”
History shows investors find a hung parliament unsettling. The fallout from the last hung parliament in the 2010 general election was a 10 per cent drop in the FTSE 100.
“It’s easy to see why investors would be erring on the side of caution ahead of this year’s election, especially with the FTSE trading so high,” said Mr Wynne-Jones.
The FTSE 100 closed at a record high earlier this week, rising above 7,100 points for the first time before slipping back in the past few days.
After the UK, the US was the second most popular geographical region, with 25 per cent of advisers betting the region would be the best place for their clients’ money this year. Other popular regions were the Far East (16 per cent) and Europe (16 per cent).