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Equities Increasingly Favored By UK Expats

Tuesday, June 17, 2014

A survey has found that British expats are becoming more positive about equity markets, and are increasingly willing to invest in stocks and shares.

Freshminds conducted a survey involving 1,039 Britons living in popular expat destinations, on behalf of Lloyds Bank Private Banking. On average, respondents said that they held 19 percent of their portfolios in equities, up from 17.5 percent a year previously. Also, the percentage of their portfolios in bonds decreased – down from 4.2 percent to 3.6 percent in the case of corporate bonds, and from 2.3 per cent to 1.8 percent for government bonds.

Forty-five percent of respondents said that they actively invest in stocks and shares and felt that their portfolio was in a better position than it was in 2012. Also, 34 percent described their portfolio as well-diversified, against 22 percent who said it was not. The most optimistic respondents were in the UAE (43 percent having a positive outlook) and the USA (37 percent).

Regarding UK investments, over half of those surveyed indicated that a proportion of their investments are in the UK. Twenty-four percent hold the majority of their portfolio in the UK, and just under 10 percent have between 90 and 100 percent of their investments in the UK. Of those who had chosen to invest their assets in the UK, 74 percent said they had maintained the size of their portfolio, while 20 percent had reduced the size of it, and 16 percent had chosen to increase it.

According to Lloyds, the trend towards UK equities is consistent with its Investor Sentiment Index, which measures each month the number of investors who hold a positive view, against those who hold a negative view, about the outlook for each type of investment over the next six months. Over the past year, sentiment has risen by 27 percentage points, with 44 percent expressing optimism. However, sentiment concerning emerging market equities remains negative on balance, at -12 percent, despite having risen by 34 percentage points.

Richard Musty, who is Lloyd's International Private Bank Director, said that the FTSE had performed strongly over the past year, and that this was why there was a strong attraction in investing in the UK. He added that there is little sign of equity inflows abating, and that "expats have clearly seen the opportunities offered in stock markets in the UK and abroad."

However, he also advised investors to do their research, and to make sure they are familiar with market movements, and that any investment plan is part of a well-diversified portfolio.