Market Research
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.