04/08/21

INVESTMENT FUNDS: Multi asset, ESG and emerging market fund demand to rise.

As published on international-adviser.com, Wednesday 4 August, 2021.

Confidence in the world economy is now at its highest level since the start of the pandemic, according to Boring Money’s latest Investor Tracker – a quarterly survey of over 1,500 retail investors.

Some 58% of investors polled said they plan to increase the amount invested in their portfolios, with multi asset, sustainable and ethical investments and emerging market funds witnessing the largest rise in demand.

Asked how they planned to invest over the next six months, some 19% of investors said they plan to up their holdings in fund of funds and multi asset vehicles, up from 13% in the first quarter of the year.

Funds defined as being ethically invested saw a larger jump, rising to 23% from 14%, while funds classed as sustainable rose to 26% from 20%.

“We are starting to observe some interesting patterns in relation to future intentions when it comes to sustainable investing,” said Holly Mackey, chief executive of Boring Money.

“Although covid-19 initially focussed minds on the need to ‘build back better’, as the cocktail of ongoing uncertainty and job insecurity kicked in, people were not in the mood to take any risks or do anything to threaten returns,” she added. “This quarter sentiment is more buoyant and the interest has picked up again.”

For future buying intentions to remain high when it comes to sustainable investing, Mackey said there needs to be a combination of positive sentiment about the economy in general along with the desire to take action to improve the world.

“This will likely remain the case until we convince a less confident investor that this style of investing need not go hand-in-hand with assumed lower returns,” she said.

Elsewhere, the number of investors surveyed planning to increase their allocation to emerging market equities increased four percentage points to 24%.

However, despite strong performance this year, appetite for UK equities fell marginally with just over a third (35%) saying they plan to buy domestically focussed funds, down one percentage point from the first quarter.

Away from equities, despite saying they were more confident in their outlook 17% of investors said they plan to increase both their corporate bond exposure (up from 11%), while those who want to invest in government bonds rose two percentage points to 16%.