Statistics

UK Investors Came Top For Returns Last Year, Beating US, Singapore - Natixis

Tom Burroughes Group Editor 9 February 2017

UK Investors Came Top For Returns Last Year, Beating US, Singapore - Natixis

A survey of investors in France, Italy, Latin America, Luxembourg, the Netherlands, Singapore, the UK and the US shows the UK came out on top for returns. Singapore investors came in fourth place.

US investment portfolios performed better than most international peers last year, making average gains of 8.2 per cent. They were second only to investors in the UK, who made gains of 13.5 per cent despite, or perhaps because of, the June Brexit vote.

The data comes from the Natixis Global Portfolio Barometer, produced by Natixis Global Asset Management, which is headquartered in France and the US. 

The results are based on proprietary research and reviews of moderate risk or balanced portfolios from financial advisors across the US, France, Italy, Luxembourg, the Netherlands, Singapore, the UK and Latin America. The data showed that Singapore investors, on average, logged gains of 6 per cent, putting them in fourth place.

In the US, diversified portfolios tended to perform better in the first half, when two sharp episodic bouts of volatility hit the markets - the first in January, when the S&P 500 Index had its worst opening since 1928, and the second in June, around the Brexit vote. In the second half, however, portfolios with a larger allocation to stocks tended to perform better.

“We saw the portfolio positioning that worked for investors in the first half of the year was vastly different in the second half, with strong equity markets driving overall performance in 2016,” said Marina Gross, executive vice president of Natixis’ portfolio research and consulting group.

US investors benefited from gains in domestic stocks, as US large-cap equities rose by 7.8 per cent and small-cap stocks jumped by 18.7 per cent. There was a strong home country bias, as about two-thirds of assets invested in equities went to US stocks.

Forex impact
Currency factors had a significant impact, particularly for UK portfolios invested in equities outside their home market. Natixis found that half of the returns in UK advisor portfolios were due to the global diversification prevalent in UK portfolios, especially following the depreciation of the pound after the Brexit referendum. For example, a UK investor with unhedged US equity exposure would have gained an extra 19 per cent in returns on those investments in 2016 due to the depreciation of the pound against the dollar.

Risk assets, such as equities and high yield bonds, generally rallied worldwide in 2016 and portfolio performance was positive in all regions analysed by Natixis.
Outside of the UK and US, investment gains in other regions were lower, between 3 per cent and 8 per cent for the year.

The biggest regional differences in asset class returns were for alternative strategies, which varied from -2.1 per cent for Luxembourg-based advisors to 3.9 per cent in the UK. 

All figures, unless otherwise stated, are derived from analysis conducted by the portfolio research and consulting group of 564 moderate risk model portfolios received in the last six months of 2016 across eight locations: France, Italy, Latin America, Luxembourg, the Netherlands, Singapore, the UK and the US. 

 

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