UK investors have shunned the shift from emerging to developed markets, according to a major new survey from Legg Mason.
Just 9% of UK investors say they switched out of emerging markets in the last year versus a global average of 33%.
The research, which polled more than 4,000 people across 20 countries, found that while 52% of investors in Hong Kong (the highest percentage of investors in the survey) shifted investments from emerging to developed markets, the UK was the joint lowest with Switzerland (also 9%).
At a global level, of those investors that have shifted investments from emerging to developed markets in the past year, the highest number (33%) said they’d made the switch to seek a higher return. Other reasons cited were an attempt to achieve a greater income (32%); to respond to ‘the improved economic conditions in developed countries’ (20%); and ‘to better diversify my portfolio’ (16%).
Looking forward, 45% of UK respondents - on par with the global average - say they believe emerging markets offer the best opportunities over the next 12 months. This finding, contrasted with the 31% who favour the US and 22% for Europe. Considering purely stocks, 57% of UK respondents believe that emerging markets offer ‘good investment opportunities’.
Globally, the US represents the best investing opportunity over the next 12 months, according to 52% of investors. This is closely followed by China (50% of respondents). Latin America, excluding Mexico, is the least favoured investing opportunity amongst global investors (12% of respondents).
Adam Gent, Head of UK Sales at Legg Mason, commented: “Our research shows that while a sizeable number of global investors have shifted their exposure from emerging to developed markets, those in the UK have been far more reluctant to make the switch. Taking a sensible, long-term approach to investing by continuing to include emerging markets as part of a balanced portfolio is an approach we would endorse.”
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