survey Archives | International Adviser

Private investors and wealth managers becoming keener on investment trusts again

Alex Sebastian — Wed, 28 Feb 2024 12:52:35 +0000

Private investors who buy investment trusts are more positive about them than they were a year ago, according to a survey by Research in Finance.

The researchers quizzed 216 private investors and wealth managers as part of the annual UK Investment Trust Study.

They found three-fifths (60%) of investment trust investors described themselves as “fans” who prefer trusts to other kinds of investment. This was up from 55% the year before. However, the percentage is still below the record high of 64% saying this in 2021.

Other notable findings included 25% of investment trust buyers said they were “agnostic” about the vehicles, while 15% saw them as more specialist and only used them from time to time.

The average age of respondents to the survey was 63, with “fans” being slightly older on average at 65 than non-fans at 61. Fans hold an average £305,000 in trusts, representing 56% of their total portfolio. The comparable figures for non-fans are £105,000 and 23%.

The study also found the biggest perceived benefits of investment trusts over other kinds of fund, such as Oeics (open-ended investment companies), include the fund manager not being forced to sell to meet redemptions, mentioned by 68% of respondents, and being able to buy or sell shares in investment trusts quickly (57%).

Dividend smoothing, pointed to by 55% of those spoken to, and long track records of dividend growth (49%) were also major plus points. Only 3% of respondents saw no benefits in investment trusts over an Oeic.

A third of respondents (33%) said they expect to invest more in investment trusts over the next six months, with 57% expecting to invest the same, and 9% less.

Among those looking to invest more, the top reason was attractive discounts to net asset value, mentioned by 85% of respondents.

Nick Britton, research director at the Association of Investment Companies (AIC), said: “It’s encouraging to see sentiment towards investment trusts improving towards the end of last year, with more respondents describing themselves as fans than we saw in 2022.

“Clearly, the benefits of investment trusts are well recognised among this group, including the fact that they are not forced sellers of assets into down markets.”

Abbie Hines-Lloyd, senior research manager at Research in Finance, added: “This wave of our survey captured an increase in positive sentiment for investment trusts as discounts were bottoming out towards the end of October.”

Clients ‘outliving their savings’ tops advisers’ list of concerns

Alex Sebastian — Thu, 22 Feb 2024 12:25:13 +0000

The prospect of their clients running out of money in retirement has emerged as a clear front runner in terms of financial advisers’ concerns.

Research by Nextwealth, sponsored by Aegon, found that nearly three quarters (71%) of the 200 advisers interviewed pointed to this as a major worry.

The researchers defined this as clients ‘outliving their money’. The significant increase in the cost of maintaining a moderate retirement, along with a continuing rise in how long people are living are the underlying factors driving it.

The second biggest concern cited by the advisers was inflation and the cost of living in general at 64%, and long-term care costs at 49% of advisers was third.

Aegon noted that the PLSA Retirement Living Standards reported a substantial increase in the amount needed for a moderate retirement over the past year.

In terms of client expectations for retirement, the researchers found 76% of advisers reported clients hope to maintain the same standard of living in retirement as before retirement, 65% said clients expressed a desire to assist their children or grandchildren financially, while 45% of advisers said their clients wished to travel or live overseas.

Steven Cameron, pensions director at Aegon, said: “While the prospect of living longer brings many benefits, this research shows there are many challenges that come with navigating and making the most of your retirement years.

“71% of advisers say that clients are concerned about running out of money before they die, which raises real issues about the adequacy of current savings behaviours, as well as highlighting the value of advice at and through retirement, including if drawing a flexible income.

“Worries about high inflation and the cost-of-living crisis also feature high on the list, with advisers finding that 64% of retirement clients raise concerns due to the current economic climate.

“It’s not surprising that worries over the cost of long-term care features as a top three concern for retirement clients,” Cameron added. “These findings highlight how important it is for Government to provide more certainty over social care funding, so advisers can help their clients to plan ahead.

“These findings reinforce the research we’ve conducted on how living longer has impacted the retirement landscape. Those approaching or in their ‘Second 50’ are bearing more of their own financial risks. This means that personalised financial planning based on an understanding of clients’ hopes and fears is crucial for tailoring strategies that meet individual needs and provide peace of mind.”

Most investors not reviewing their pensions annually, research finds

Alex Sebastian — Wed, 14 Feb 2024 13:13:55 +0000

Only 47% of investors have reviewed their pension funds in the past year, according to research by Investec Wealth and Investment.

The researchers also found just 18% said they ‘regularly’ review their funds.

There was some variation between older and younger investors with people aged between 55 and 64 more likely to review their funds. Of this age group, 62% said they had reviewed their pensions in the past year with 27% reviewing them regularly.

The study also found nearly one in four (23%) pension investors do not know the level of risk on their main pension fund, while around 41% believe it is very low risk or low risk.

Many investors seem to have too little money in their funds, with 38% of those questioned having less than £75,000 saved, across all age groups.

Faye Church, senior chartered financial planner at Investec Wealth & Investment, said: “Anyone contributing to a pension should be reviewing their funds at least annually. So many people invest in the default fund available and then forget about it.

“There can be a huge difference between investment selection and performance, which in turn dictates the growth of the pension fund, especially when you consider someone contributing in their 30s won’t be able to access the funds for another 20 years or so.

“Part of the investment review should focus on risk through asset allocation, as the longer you have to invest the longer you have for any peaks or troughs to even themselves out. Given most people can’t access their pensions until 55, this brings with it an opportunity for younger savers to obtain some good long-term growth within their pension.”

Investors increasingly eyeing alternatives as volatility fears rise

Alex Sebastian — Tue, 13 Feb 2024 12:31:30 +0000

Institutional investors are increasingly considering moves into alternative asset classes owing to expectations of rising volatility in equities markets this year, according to research from Carne Group.

The firm found two out of three institutional investors (67%) believe the level of volatility in markets will rise this year, with 6% predicting a dramatic increase.

Carne Group commissioned Pureprofile to interview 201 investors working for pension funds, family offices, wealth managers, insurance asset managers and consultants across the UK and continental Europe. Those taking part had a total of $1.7trn under management and were spoken to in December 2023 or January 2024.

The researchers also found that close to nine in 10 investors (88%) said they believe their organisation’s appetite for risk will be higher this year, with 11% saying it will be much higher.

Among pension funds alone, 92% expect risk appetite to be higher, with 6% expecting it to be much higher, while for family offices the corresponding figures are 83% and 20% respectively.

Around 86% of insurance asset managers expect an increased risk appetite with 6% said it will be much higher. For wealth managers the figures were 85% and 14% respectively and for consultants they were 96% and 13%.

In terms of which alternative asset classes are most appealing, around 65% of those interviewed chose hedge funds as among the top three private asset classes for growth in inflows, while 57% selected venture capital and 56% said private equity.

The full findings:

Asset class	Number of institutional investors forecasting the asset class will be among the top three for attracting institutional inflows over the next five years
Hedge funds	65%
Venture capital	57%
Private equity	56%
Renewable energy	55%
Private debt	30%
Real estate	30%

John Donohoe, CEO at Carne Group, said: “Sustained stockmarket volatility and investors seeking higher returns has driven increased interest in alternative asset classes which generally show lower levels of correlation to short term price movements, which is important not only for diversification but also for regulatory purposes.

“The growing focus on alternatives is not a short-term move either, with institutional investors predicting strong but selective growth in inflows to alternatives over the next five years. One area we are seeing a particular increase in inflows is private debt, and our research suggests this is likely to continue.”