Euro debt is a major worry for investment advisers
The eurozone debt crisis is increasingly becoming a major challenge for investment professionals as confidence wavers in the ability of some countries to meet their debts – and the effect this might have on the stronger economies.
Nearly eight of 10 advisors cite the economic crises in Portugal, Ireland, Italy, Greece and Spain as the most important global macroeconomic issue for investors, according to the latest Barings Investment Barometer.
The survey also discloses a worsening trend for falling confidence in the way the Eurozone is handling the problem – with two-thirds of advisers in the last quarter seeing the crisis as a challenge, compared with 51% in the previous three months of the year.
Rod Aldridge, head of UK retail distribution for Barings, said, “The growing concern among investment professionals regarding the outlook for Europe, and the belief that a second banking crisis is becoming more likely, was to be expected given recent headlines, but it is encouraging that investment professionals continue to place such a great emphasis on diversification of assets to navigate these recent uncomfortable levels of volatility.”
The possibility of a second banking crisis is haunting investment advisers, with the number voicing their concerns almost tripling from 15% in the first quarter to 41% in the second quarter.
How over-leveraged economies will cut debt is also a rising concern, with 74% citing worried about the effects on investment growth compared to 65% in the previous quarter.
“As the search for growth continues the popularity of emerging market and Asian ex-Japan equities supports the compelling stories that these markets have to offer,” said Aldridge. “Fixed income is gaining in favour reflecting the increasing desire of investors to remove a certain amount of risk from their portfolios.”
The survey disclosed advisers are still most likely to encourage their clients to diversify their assets to mitigate market volatility (76%), followed by encouraging more regular reviews of their investment portfolios (49%).
Global equities were held as the most attractive asset class (90%), slightly ahead of emerging market (89%) and Asian ex-Japan equities (86%).