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Advisers bring risk back as markets look skyward

Advisers bring risk back as markets look skyward

Advisers using the Old Mutual Wealth platform began to allocate toward equities in the final months of 2020 as vaccine hopes and the US election spurred markets skyward.

Data from Quilter, seen by FTAdviser, showed quarterly flows into global equities rose by 23 per cent in the three months to December, while UK and European stocks saw 13 and 10 per cent higher inflows respectively.

UK stocks saw a rise in inflows for the first time since Q1 2020, having been a lagging market since the coronavirus crisis began, while Q4 represented the second consecutive quarter of growth for European equities.

Advisers on the Quilter platform were less keen on Asian equities, however, as exposure to the Far East decreased by 8 per cent while Japan was down 2 per cent.

Quilter's Old Mutual Wealth platform is one of the largest adviser platforms in the market, with £57bn in assets, and used by more than 7,500 advice firms.

Andy Miller, investment specialist at Quilter, said: “Markets have not only recovered but started to soar in recent months.

“Some [...] unknowns like the US election and Brexit are now clearer, giving investors a better view of the horizon. This has allowed many advisers to begin adding risk back to portfolios and increasing exposure to equities to capture the rally.”

The most popular asset remained fixed interest, however, which saw net inflows of nearly 50 per cent over the quarter as advisers looked to maintain defensive qualities to client portfolios.

International fixed income rose by a similar margin, a clear indication advisers are not yet prepared to be fully “risk-on”.

Fixed income is seen as a relatively ‘safe haven’ asset, immune from the downturn equities could face if the so-called economic reality catches up with the market.

Mr Miller said the world was still living in “precarious times” and advisers were acutely aware that volatility was “never far from the door”, and have therefore set their clients' portfolios up accordingly.

He added: “With the costs of a third lockdown still uncalculated and the impact of the vaccine rollout yet to filter through, the economic outlook is still difficult to predict.”

The final phase of Quilter’s platform migration is set to occur on the final weekend of February, when the remaining 20 per cent of assets will be transferred across to its new technology.

It has faced delays, with the long-awaited switch originally set for summer 2020 not happening until the end of November after the advice giant put the process on hold as advisers battled to navigate the uncertainties of the coronavirus pandemic.

imogen.tew@ft.com

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