Schroders sees investors ready to return to European equities

Global investors are ready to return to the European equity market, according to a poll conducted by Schroders.

At a recent investment conference, the fund manager questioned over 120 intermediary clients attended from across the globe on their strategies and expectations.

The results revealed increased sentiment for European equities, which were tagged the most attractively valued asset class at the moment.

As a result, 41% of respondents expect to increase allocation to the sector within their clients’ portfolios by the end of the year. Three-quarters of delegates admitted they had already re-risked their clients’ portfolios, or would expect do so within the next six months.

A similar trend has been notable among UK investment professionals in the last three months.

The Baring Asset Management quarterly Investment Barometer indicated that over half the respondents (53%) said they were now either ‘quite’ or ‘very’ favourable towards European equities, up from 42% in the last survey.

This is the most positive attitude to equities Barings has seen all year.

Peter Beckett, head of international marketing at Schroders, said: “Despite on-going uncertainty across Europe, our survey has highlighted a possible turning-point in investor sentiment towards European equities and risk assets. With valuations looking particularly attractive at the moment, this could indicate that the time for a re-entry to risk assets may be upon us.

“This is consistent with our survey from earlier this year, when investors asserted they considered equities to be the most important asset class for the rest of the year.”

Schroders’ poll also revealed this return to risk over the past six months is coupled with a continued search for yield.

In the current low yield environment, more than three-quarters of respondents said the minimum yield they would accept from an equity fund would be between 3% and 5%.

European equities are well positioned to deliver these returns. The MSCI Europe index has been rising steadily and is up more than 10% year to date.

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