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Advisers Shun China for US Stocks

US and UK equities are top of the favoured sectors advisers will be recommending to clients in 2014 - with corporate bonds and Chinese companies bottom of the pile

Emma Wall 2 December, 2013 | 4:59PM

Advisers plan to recommend developed market equities to their clients next year, with the UK All Companies sector proving the most popular choice, followed by UK Equity Income, Global Equity Income and North America funds.

UK gilts, with Global Bonds, High Yield and Asia Pacific ex Japan equity funds fell to the bottom of the selection, listed as the least popular. 

The Schroder Adviser Survey 2013 also revealed that over the past 12 months advisers had increased their clients' exposure to developed market overseas equity funds, and chosen not to add to their emerging market exposure. Advisers have also decreased clients' exposure to corporate bonds and government bonds. Advisers admitted they intended to continue to trim and add to these asset classes over the next 12 months.

The Survey also investigated how advisers incorporated passive funds into their clients' portfolios. While 61% of advisers said they had increased their use of passives over the past year, seven in 10 said they expected to have the same proportion of clients' money in passives in 12 months’ time, suggesting that the "passives ceiling" is close to being reached. 

The uptick in passive usage over the past year is in part due to a larger proportion of advisers outsourcing portfolio management. Depending on the size of client portfolios, advisers are choosing to outsource to multi-managers, wealth managers and platform provider linked managers - who themselves use passives to gain exposure to certain markets. Sixty two per cent of advisers have increased the proportion of assets they outsource according to the Survey.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Emma Wall  is former Senior International Editor for Morningstar

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