UK Advisors Shy Away From Their Home Market As Brexit Looms On Horizon - Data

Josh O'Neill

11 August 2017

UK advisors are turning their backs on their home market as the nation’s future prospects continues to decline with Brexit looming large on the horizon, according to new data from .

The Paris-listed firm’s latest UK Portfolio Barometer logged a decline in investor sentiment towards the UK and highlighted an uptick in the number of portfolios with reduced domestic bias in the second quarter of this year.

The Barometer, which tracks and offers quarterly insights into the activity of 117 UK risk-rated model portfolios, saw conservative baskets shift into multi-asset, absolute return strategies, as advisors recognised that fixed income with a domestic bias was likely to be lower yielding and higher risk, Natixis GAM said.

“The reduction in domestic bias is positive as international assets should provide much-needed diversification in the event of the UK suffering a hard Brexit, from both currency in the short term and asset returns in the longer term,” said Andrew Kinsey-Quick, senior consultant for Natixis GAM’s portfolio research and consulting group. “Within the fixed income space, we have seen some growth in domestic exposures but a more notable growth in non-domestic fixed income.”

Meanwhile, the data showed that within conservative models, advisors reduced exposure to inflation-linked fixed income and direct property, and instead returned to multi-alternative strategies classified as absolute return.

“Despite the ramp up in sales of inflation linkers in the first quarter of this year, there has been a definite slowing down of inflows in the second quarter,” Kinsey-Quick said. “In fact, it looks to be stagnating. Economic prospects for the UK are not as negative as first perceived after the Brexit vote, but the uncertainty facing the UK economy is still very much a concern.”