Market Research

UK Investors Shied Away From Risk, Equities In Q1 2017 - Data

Josh O'Neill Assistant Editor 18 May 2017

UK Investors Shied Away From Risk, Equities In Q1 2017 - Data

Natixis has released the results of its latest UK Portfolio Barometer.

UK investors cut their exposure to risk in the first quarter of 2017 as they steered away from equities, even though volatility in the asset dipped to near historic lows, according to new data.

Natixis Global Asset Management’s latest UK Portfolio Barometer found investors to be risk-off in the first quarter of this year. This was a “stark contrast” compared with the final quarter of last year, when investors upped their appetite for risk as they rotated out of fixed income and into equity strategies, Natixis said.

The barometer tracks and offers quarterly insights into the activity of 97 UK risk-rated model portfolios residing in conservative, moderate and aggressive categories.

“Investors’ risk-off stance was a result of heightened risk in the European political arena brought on by elections in some European Union states – which, despite the uncertainty, was not bellied by an uptick in volatility in the equity market,” Natixis said in a statement.

Despite the general risk-off stance, investors who fell under more aggressive mandates were not duly rewarded, as portfolios underperformed in the short-term compared with those in the moderate category.

While volatility in equities muted in Q1, the fixed income market experienced a surge in volatility in recent quarters, Natixis said, and the US led a secular change in interest rates. This trend is likely to occur in the UK, and later in Europe, assuming growth and inflation remain resilient, the barometer suggests.

Meanwhile in the States, President Donald Trump’s review of the 2010 Dodd-Frank Act – which aims to give investment banks more leeway – coupled with his $1 trillion request to congress for infrastructure spending contributed to a more bullish outlook in the US.

These overshadowed negative events such as investigations into Russian involvement during the election campaign, reversed stance on Obamacare and temporary travel bans, Natixis said.

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