Could multi asset investing represent the investment antidote to Brexit market volatility?
A high proportion of financial advisers plan to introduce greater diversification during the next year.
The referendum result in June is seen by financial advisers as the biggest global macro-economic challenge to investment growth over the next six months.
According to a new survey by Barings, 73% of financial advisers consider Brexit to represent the biggest upcoming investment challenge.
Brexit comes ahead of the US presidential election, China’s slowing economic growth and the inability of over-leveraged economies to reduce debt levels.
Barings’ IFA Barometer found that 51% of independent financial advisers are explaining to clients that they should think about greater diversification of investment assets.
To contest current market volatility, 27% said that they were recommending their clients invest in multi asset investments.
The research shows that 48% of financial advisers surveyed are more favourable towards multi asset growth products.
13% of financial advisers believe that clients, during the course of the next 12 months, will increase their exposure to multi asset investment funds by more than 20%.
Only 5% of financial advisers expect exposure to multi asset investments will be decreased.
Marino Valensise, Head of Multi asset & Income at Barings, said:
“Before the referendum, a vote for Brexit was perceived by UK IFAs as the biggest threat, and we are now in that volatile landscape.
“IFAs and their clients are asking what they can do to mitigate risks.
“With the Brexit vote now cast, the feared uncertainty and volatility has certainly played out, as much on the political stage as in markets, and looks set to continue as the Brexit decoupling gets underway.”
As well as expecting exposure to multi-asset investment funds to increase, 29% of financial advisers thought they would increase allocations to developed market equities.
83% of advisers predict that the economy will go through on-target price inflation over the next three years.
This appears to be a high level of confidence that price inflation will return to target, despite a long period of below target inflation.
The research also found that 17% of financial advisers are certain that there will be a major global stock market correction in the next year.
According to the respondents, the issue clients were mostly anxious about was the low interest rate environment which was placed above equity market volatility.
Do you think multi-asset investing is the investment antidote to Brexit market volatility? Will your portfolio become more diversified during the next year?