Politics and political risk looks set to dominate investor concerns during the rest of 2017, according to a poll of wholesale and institutional clients at Royal London Asset Management’s annual investment conference. 38% of clients polled cited the potential failure of Donald Trump to deliver on his proposed economic reforms as the biggest threat, while another 22% opted for concerns over Brexit and the Eurozone crisis.
A further 26% of clients suggested that the biggest threat for investors would be rising inflation and interest rates. While secondary to political concerns, this worry has fed into the asset classes which clients look set to favour in the next 12 months. Over half (58%) of those surveyed selected equities, while a further 16% plumped for commodities. Perhaps in a nod to the concerns on political risk, nearly one in five cited cash and absolute return strategies as their favoured asset class.
When it came to the best opportunity for income right now, the mood amongst clients was more varied. Multi-asset income and equity income were both strong contenders, picked by 24% and 22% respectively, while a further 18% selected infrastructure. High yield bonds, one of the audience’s favourite fixed income asset classes (after multi-asset credit solutions), were also a popular choice for income, selected by 13% of those surveyed.
Commenting, Rob Williams, Head of Distribution at Royal London Asset Management, said:
“While the announcement of the UK general election and the results of the French election were rare cases of politics stabilising markets, politics and policy look set to maintain their impact on markets during the coming months.
“RLAM will continue to look to focus on meeting the needs of our broad range of clients in these markets. We aim to deliver this both through our current proposition, particularly in multi asset and short duration fixed income investing, and by broadening our offering in areas such as global equities and multi-asset credit funds.”