Dubai: A majority of GCC financial advisers are looking to increase their exposure to global developed equity markets even as a substantial number are also inclined to put their money into the region’s stocks in the coming 12 months, according to a survey carried out by Insight Discovery, a strategic research company.
The survey’s findings point out that 52 per cent and 48 per cent of the advisers are bullish on the equities of the developed and GCC markets respectively. Global emerging equity markets find favour with 47 per cent of the respondents, which is significantly different from last year’s response.
“The biggest shift is away from global emerging markets, which has slipped from pole position to number three,” Nigel Sillitoe, chief executive of Insight Discovery, said. “Whilst emerging markets remain popular, what this might prove is that some advisers have taken some risk off the table by looking to allocate more of their client assets to developed markets.”
When asked about their investments in Sub-Saharan Africa, 44 per cent answered in the positive, saying they are going to increase their weighting in equities of the region.
This, Sillitoe believes, is due to two reasons. One, several asset management companies with African equity funds have been marketing their products to advisers over the past year or so and two, there is a strong investment case for allocating a small percentage, depending on the client’s risk tolerance, to a frontier market such as Sub-Sahara Africa. The MSCI Frontiers Index has gained 19.36 per cent this year.
Approach to hedge funds
On gold and other commodities, 29 per cent and 26 per cent of advisers are planning to reduce their exposure respectively. Also, 22 per cent is looking to reduce their exposure to single strategy hedge funds.
Investors or clients have a home bias — not an unexpected finding — that the region’s advisers cater to by providing different offerings and platforms. According to Andy Heron, private client adviser at AES Middle East Insurance Broker, many clients have a home company bias, but in the main, this is due to investing in the currency of the company in a country they are likely to reside in the future e.g. GBP if returning to the UK.
Advisers offer a number of offerings to clients, depending on their risk profile and currency choice. The majority of AES’ cleints, for example, will invest in GBP, EURO or USD. So, cautious, balanced and aggressive portfolios in these currencies provide adequate investment opportunities. It also offers a number of onshore and offshore platforms, which can provide clients an opportunity to construct portfolios that meet their needs.
