It is always interesting to see where adviser and investor sentiment lies.
New research suggests that a preference towards UK and European equities has reached its highest level since the launch of the regular study.
The Barings Investment Barometer found 91% of IFAs are favourable towards European equities, up from 63% a year earlier.
93% of advisers surveyed by Barings are currently favourable towards UK equities, up from 79% a year before.
They found that the number of advisers ‘very’ favourable towards European equities was up sharply to 39% from 18% twelve months ago.
A similar shift in those ‘very’ favourable towards UK equities was found, up from 29% to 40%.
So, sentiment is clearly shifting towards these risk assets. What does this tell us?
Market sentiment is often considered to be a contrarian indicator; Warren Buffett famously once said “…try to be fearful when others are greedy and greedy when others are fearful”.
So a survey telling us that sentiment has shifted towards UK and European equities might suggest investors have already missed the boat and would be well advised to do the opposite.
Investing is however rarely that simple.
It doesn’t make sense to invest based on what others are doing or what others believe will happen next.
The best approach to investing is to determine a strategic asset allocation position based on how you can afford to invest, how you need to invest and how you want to invest.
This combination of financial planning goals, attitude to risk and capacity for risk is essential in driving asset allocation decisions, rather than getting too worried about market sentiment.
Assuming you are investing for the long-term (which you should be), the views of the market and its advisers over the very short-term are inconsequential, particularly assuming you have a well diversified investment portfolio.
Do speak to us about an intelligent approach to investing. We would love to help manage your portfolio.
