Talking Point  

Advisers fairly confident over 2020 investment landscape

Advisers fairly confident over 2020 investment landscape

Two thirds of advisers are confident about investments in 2020, according to the latest FTAdviser Talking Point Poll.

The poll asked advisers the following question: “How confident are you about the investment landscape in 2020?

 A third (32 per cent) said not at all confident, but 50 per cent said they were reasonably confident, while 18 per cent said they were very confident.

Alan Chan director and chartered financial planner at IFS Wealth & Pensions, believes that 2020 is likely to be a difficult year for investments following Brexit as the country tries to “find its feet”.

“I can also see the other side of the coin,” he added. “Once we get some certainty it will help firms to plan.”

While he believed UK equities might be one of the assets most under pressure following Brexit, he added that there could be good investment opportunities in UK small and mid caps.

According to a report by Morningstar, many investors have steered clear of small cap stocks since the referendum of 2016. 

The report added: "Typically, these businesses are more domestically focused - unlike their large cap counterparts which get much of their earnings from overseas - making them more vulnerable to any slowdown in the UK economy or drop in consumer confidence. 

"But surprisingly, even the worst small-cap performers have outshined their larger-cap peers.

"As British blue chips have been helped by a weaker pound in recent years, which has helped to boost their bottom lines, many smaller companies enjoy this tailwind as well."

Adrian Lowcock said the Talking Point poll reflected where investors were at as 2019 draws to a close.

He added: “The outlook has improved as the economic slowdown seems to have stopped and recovery could be underway but it is very much a case of glass half full or glass half empty. 

“I am somewhere close to reasonably confident on the global economy for 2020 but expect investment returns to be much more muted than we saw in 2019.”

He explains that in the UK valuations are cheap and there are plenty of opportunities for investors. 

Having had years of austerity, the UK looks to be ready to boost fiscal spending which should be supportive of the economy and stimulate growth. 

“This should begin to feed through to the economy in the second half and may offset fears of a no-deal Brexit when the transition agreement expires at the end of the year. 

“The UK  market is not immune to the global economy as it is international in nature so US-Chinese trade negotiations will matter,” Mr Lowcock added.

Overseas, the US is more mixed. Valuations became more stretched in 2019 as markets continued upwards in spite of the economy slowing slightly. However they are not extremely expensive so there is still opportunity for investors. 

Europe’s exposure to trade and reliance on manufacturing made it a casualty of the trade war and the global downturn in 2019.