Advisers back global equity funds as way forward

Advisers back global equity funds as way forward
Unsplash/ Alexandr Podvalny

A big majority of advisers believe the best way to achieve diversification from equities is via owning global funds, according to the latest FTAdviser Despatches adviser poll.

Respondents to the poll were asked: “Are global equity funds the best way to get equity exposure”, with 75 per cent replying “yes” and 25 per cent replying “no.” 

Global equity funds have been the biggest sellers in the IA equity universe for the past four consecutive years, a time period during which there have been extensive outflows from the UK equity sectors in particular.

Amid the highly unusual market conditions of the past decade, asset allocation within equities has been acutely difficult, perhaps increasing the appeal of global equity funds, which enable the investor to effectively outsource the asset allocation to a third party. 

It has also been a noticeable feature of the market this year to date that global equity income funds, arguably sometimes a forgotten part of the market, have seen inflows at the expense of UK equity income funds, which were once a huge part of the UK client’s portfolio. 

The weakness of sterling relative to the dollar may also be a contributing factor, as the value of the overseas earnings increases when translate back into sterling and paid out as dividends in the UK.