The global economy is going through a “transformational change” as advisers begin to show increased confidence in equities.
At a breakfast briefing yesterday (September 19), Chris Miles, head of UK financial intermediaries and Steven Smith, equity investment director at Capital Group, discussed the firm’s launch of its New Perspective Fund to UK investors.
A survey of financial intermediaries by the firm found 56 per cent expected their clients would increase the amount they invest.
With 56 per cent having confidence in equities over the next 12 months and 60 per cent having less confidence in cash.
“Given interest rates are turning, typically at this point in the cycle, cash rates tend to decay relatively quickly, and so the opportunity for clients to put their money to work and for advisers to talk to their clients about benefits of long term investing particularly when it comes to equities, seems to be coming out very strongly through the survey,” Miles said.
In terms of regional breakdown and the types of companies advisers are interested in at the moment, 58 per cent were confident in the outlook for the UK, followed by global (37 per cent) and emerging markets (36 per cent).
Miles explained: “Interestingly, what's coming out through the work was that seven in 10 respondents expressed positive belief in the future of multinationals.
“What we found with multinationals over time is that these companies tend to be quite resilient and adaptable to change. And this theme of transformational change and the ability for these multinationals to really take advantage of change and adapt to what's going on globally, has been a strong theme.”
Some 66 per cent of advisers believed the global economy was undergoing a “transformational change”.
“That's down to a number of major themes including artificial intelligence with people being quite excited about the opportunity.
“There are also themes around energy transition, innovation in healthcare and evolving globalisation. What's exciting about these themes is that they are multi-generational, they're long term, and they're quite deep when it comes to investment opportunities and the different ways for which you can look to bring ideas over the long term,” Miles added.
Smith believed we were in the “innings of a profound secular change” in the global economy which would define the next decade of equity market investing.
“What we're seeing today is a rare confluence of numerous large, profound, secular changes all occurring at the same time. If you think back in history, about global economies and stock markets, they've quite often been driven by a single thing, a single country, a single part of the global economy,” he added.
These changes consisted of accelerated digital disruption, a golden era of healthcare innovation and industrial resurgence and industrial renaissance.
In terms of sentiment amongst advisers on investing in global equities, Miles believed the reasons to go global were “well understood” by advisers.
