Advisers’ clients are positioned in UK value stocks as the prospect of Brexit looms.
The latest poll by FTAdviser Advantage showed a clear majority of respondents, 65 per cent, said their clients favoured value over growth stocks in the UK equity market.
Growth investors seek companies that offer strong earnings growth while value investors seek stocks that appear to be undervalued by the marketplace.
Only 14 per cent have chosen to invest in growth stocks ahead of the government’s decision to trigger Article 50 that will set the wheels in motion for the UK to leave the EU.
Another 14 per cent of advisers polled revealed their clients are not invested in UK equities at all, while 7 per cent said they had taken a defensive stance in the stockmarket.
The results are similar to research carried out by Investec Asset Management which sought the views of more than 150 UK wealth managers and fund buyers at a series of roadshows this year and found they have shifted from growth to value.
It reported more than half of those who cast their views believed global equities will offer the best investment opportunities for clients this year.
David Aird, managing director of Investec Asset Management’s UK client group, said: “While UK equities remain a core part of many investors’ portfolios, continued economic and political uncertainty in the wake of the EU referendum, mean that investor confidence in the region is unsurprisingly muted.
“Four in 10 respondents reduced their allocation to UK equities over the last 12 months. Nevertheless, 13 per cent of UK wealth managers and fund buyers believe that the asset class will provide the best investment opportunities for their clients in 2017.”
Bruno Springael, senior portfolio manager, Global High Dividend at NN Investment Partners commented: “We are seeing a pause in the recovery of value stocks so far this year, key factors in this being growing political risks and the recovery in earnings. We anticipated such a pause after a strong second half in 2016 and now is probably a nice entry point for investors.”
“Value outperformed growth convincingly in 2016 but despite this, the valuation gap between the two styles remains significant. We therefore believe that value can again outperform in 2017.”
eleanor.duncan@ft.com
