Advisers are shifting away from ‘home bias’ when it comes to picking funds, according to Benjamin Reed-Hurwitz, EMEA research lead at ISS Market Intelligence.
He claims there has been a reduction in the desire to invest more in domestic assets, with advisers opting for a global approach instead.
Reed-Hurwitz said: “The era of home bias has sort of declined, the home bias effect is much less strong.
“UK equity flows are going to reflect their global performance.”
Reed-Hurwitz’s research, focused on the advice market, has seen a move towards a portfolio which is rooted globally, he told FT Adviser.
“UK equity will be compared to US equity or European equity, in terms of its relative value. So it is really that relative performance that’s going to matter,” he said.
“Something we have seen across the globe, and in many markets, is this re-anchoring of the portfolio globally, and therefore local flows will be a lot more determined on relative performance.”
Naturally, UK investors and advisers will be watching the approach the government takes
When it comes to the preference of advisers between active and passive management, Reed-Hurwitz said there has been a rebalancing to blended portfolios across the market.
He said: “I really think there are two stories depending on the fund selector and the adviser base.
“One, the conviction around sort of where active and passive are best used. And then two, the desire to have a cost controlled solution.”
Following the Spring Statement in March, Reed-Hurwitz believes advisers will be keeping a close eye on political messaging ahead of the Budget this autumn.
“Naturally, UK investors and advisers will be watching the approach the government takes, both in terms of encouraging investment, but also impacts on household budget,” he said.
“I do expect that there will be a heightened period of expectation, I think whether that’ll be positive or negative will ultimately come down likely to the framing the government gives in advance.”
tara.o’connor@ft.com
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