CoronavirusJun 15 2020

Advisers optimistic for speedy market recovery

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Advisers optimistic for speedy market recovery

Financial advisers across the globe are optimistic about a market recovery following the coronavirus pandemic, according to newly-released data collected at the height of the crisis. 

Research published by Natixis Investment Managers today (June 15) found advisers expect the stock market to post only modest declines for the year with hopes it will continue to recover in the coming months. 

In a survey of almost 3,000 financial professionals across the globe, including 300 investment advisers, wealth managers and financial planners in the UK, conducted by between March and April, year-end returns were predicted to be closer to those seen in 2018 rather than the crash of 2008.

On a global scale the respondents forecast a loss of 7 per cent for the S&P 500 and a loss of 7.3 per cent for the MSCI World Index at year end - closer to the respective drops of 4.38 per cent and 8.2 per cent seen in 2018 than the losses of 37 per cent and 40 per cent reported in 2008. 

The predictions of UK advisers were amongst the most optimistic of the 16 countries surveyed for the research, forecasting a loss of 7.1 per cent for the S&P 500 and 6.9 per cent for the MSCI World Index.

But elsewhere countries including Australia, Germany, and Hong Kong predicted double digit losses for the year. 

Darren Pilbeam, managing director of UK retail and wholesale sales at Natixis Investment Managers, said financial advisers around the world were bullish on recovery as economies slowly begin to reopen. 

Mr Pilbeam added: "But they are also focused on how to shield clients from the volatility they expect to come with it.

"The crisis has been a perfect storm for emotional investment decision making, and with the downturn exposing the limitations of passive investing, the vast majority of advisers are looking to active management in the current environment."

Despite the widespread optimism surrounding the market's ability to bounce back, Dave Goodsell, executive director of Natixis’ Centre for Investor Insight, said the downturn had served as a lesson in behavioural finance learned through "real losses and missed goals". 

The research found 85 per cent of the advisers surveyed in the UK thought individual investors had been unprepared for the market downturn witnessed at the height of the coronavirus pandemic and 78 per cent agreed investors had likely forgotten that the longevity of the bull market had been "unprecedented".

Mr Goodsell said: "Investors got a glimpse of what risk looks like again, and it’s a teachable moment.

"Financial professionals can show their value by talking with clients in real terms about risk and return expectations, helping them build resilient portfolios and how to keep emotions in check during market swings."

rachel.mortimer@ft.com

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