Results from an iShares investor survey shows UK investors believe any economic recovery will be short lived, with the majority of investors positioning their portfolios in preparation for a …
‘W’ shaped recession. The survey, undertaken by iShares to capture investor opinion about the investment challenges they are currently facing, has also been reflected in the range of Exchange Traded Funds (ETFs) investors have chosen in recent months, with fund flows largely consistent with investors’ views.
The survey, which collated over 200 responses for each question, asked leading ETF
investors to consider answers relating to some of their key investment challenges, revealing the following findings:
- 61% believe the recovery will take the shape of a ‘W’ as opposed to a ‘U’ or a ‘V’
- 78% think the emerging markets will come out on top at the end of the recession versus the west
- 55% think they should still be overweight on defensives as opposed to cyclical stocks
- 90% believe corporate bonds are pricing in a recession followed by a recovery rather than just a depression
- 63% think inflation will rise in 2010
A broad range of investors were surveyed, including institutional, private banks and high net worth managers.
Commenting on the findings, Nizam Hamid, head of sales strategy for iShares in Europe, said:
“After finding out the thoughts of investors, we can see it clearly reflects their selection of ETFs and trends in asset flows. For example, over the past twelve months, an interesting trend has been the strength of flows into emerging market countries which have totalled €2.2 billion (bn) compared to flows of €1.8bn into developed market countries, in the Exchange Traded Product space. Fixed income has become firmly established as an important asset class and the key area for asset gathering in fixed income remains corporate bonds, seeing inflows of €3.3bn over the past year. Furthermore, in the past six months, inflation linked ETFs have attracted €1.1bn of assets as investors consider the risks to current price stability.
In addition, we’ve also seen a shift towards more defensive sectors such as utilities.”
He concluded: “Investors are facing unprecedented challenges and are clearly using ETFs to help implement their investment strategies. As part of our ongoing education campaign, we will help investors understand the panorama of ETF opportunities available to them and guide them on how best to manage their client portfolios.”
Source: ETFWorld – iShares