Political uncertainty is dominating UK investor behaviour, a new poll shows.
A study of UK investors by Schroders finds that they are more worried about geopolitics than their global counterparts, but more willing to hedge. They admit holding back on making further investments until the political dust has settled, but are more likely to be more diversified than their global counterparts. Almost a third believe that investing in emerging markets could be beneficial to their portfolios.
These are some of the findings of the Schroders Global Investor Study 2019, which surveyed 25,000 investors in 32 countries in April, including 1,200 from the UK. It found that in the the UK, not surprisingly, more respondents were gripped by political uncertainty than in Europe or globally, and they were still feeling pain from the global markets tumble in 2018.
Among UK respondents, three quarters admitted that politics and market events out of their control were affecting investment decision-making, with a fifth saying that uncertainty was causing them to curtail investing until events had settled down. But roughly the same proportion saw the unsettled picture as an investment opportunity.
Despite weathering three years of Brexit paralysis and now a Conservative Party leadership battle to decide who writes Brexit's next chapter, UK investors are not as reactive to political instability, with 65 per cent adjusting for risk as opposed to 70 per cent among global investors.
“Given the level of political uncertainty currently in the UK, it is perhaps not surprising that UK investors seem particularly sensitive to events that are out of their control,” Phil Middleton, head of UK intermediary business at Schroders said. But they should "not to be swayed by short-term noise and instead focus on their long-term investment goals.”
Middleton said the poll also showed that UK investors still had unrealistic expectations on returns, hoping to make an average 9.9 per cent return over the next five years. “This perhaps explains why almost half felt they hadn’t met their investment objectives over the past five years. A focus on the long-term and a lowering of their investment expectations is likely to stand UK investors in better stead towards meeting their investment goals going forward," he said.