Advisers unsure of what assets will generate the best returns

A relatively high proportion of advisers (22%) are unsure of what asset class they would expect to generate the best returns over the next year, new research has found.

The study, conducted by Aegon, comes as investors face having to navigate a complex range of factors including trade tension and growth concerns, with many questioning if the longest bull market in history could be coming to an end.

Ever since the referendum in June 2016 UK equity funds have seen record outflows. Despite this, 14% of advisers put this asset in their predicted top three best performing asset classes. Similarly, although this class has recent falls, advisers also ranked US equities (22%) and emerging market equities (15%) highly.

While many consider cash to be a safe haven during times of volatility, surprisingly the research revealed that 24% of advisers predicted this to be the worst performing asset class over the next year. Following closely behind were gilts with 19% of advisers expecting them to perform the worse, and corporate bonds were ranked as the third worse asset class (8%).

Aegon highlighted that the mixed predictions of advisers reflects current market volatility and political instability.

Furthermore, the research illustrated that adviser’s opinions differed depending on their average client portfolio value. Those advisers whose clients’ have an average pot of £200,000 or more, Asia Pacific assets are predicted to be the fourth highest performing asset at 11%, compared to the 4% statistic for advisers whose average client portfolio is below £100,000.

Similarly, advisers whose clients’ have an average pot of under £100,000 are more likely (6%) than advisers whose clients’ have an average pot of over £200,000 (2%) to expect Japanese equities to perform well in the next 12 months.

Commenting, Aegon investment director Nick Dixon said: “In this highly volatile investment landscape, advisers are right to question whether the longest bull market in history could be coming to an end. When it comes to investment decisions, advisers and investors are having to face a number of concerns head on. This includes the impact of geopolitical stress on emerging markets, equity valuations, and potential impact of Brexit on UK equities.

“However, our research shows that advisers remain level-headed in the face of a very fickle market. Advisers are right to remain focused on long-term returns, diversification, and avoid reacting to fast moving market conditions.”

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