Anticipated massive withdrawal of savings amid prevailing optimism in stock and share market investments
The Schroders 2024 Financial Advisers Survey, conducted between October 23 and November 5, 2024, has shed light on the investment trends anticipated for the coming year. The survey polled 293 financial advisers online, providing valuable insights into the expected returns and asset class allocations of their clients.
The survey results indicate a renewed sentiment towards investing, with a third of advisers expecting an increase in client allocations to emerging markets, making them the third highest asset class. This is a notable increase from the 49% who gave the same answer six months ago. Emerging market earnings expectations for the next 12 months are strong, according to Stuart Podmore, investment propositions director at Schroders.
In contrast, a majority of advisers (67%) predict a cash exodus over the coming months, with less than 10% expecting their clients to increase their allocation to cash. This trend is reflected in the survey's projections, with cash savings expected to yield around 6.6%, slightly outperforming the 6.2% forecasted return for stocks and shares.
UK equities are tipped to enter a bull market, according to the advisers, with more than 35% expecting their clients to increase investments in UK equities over the next 12 months. This optimism is shared by 57% of respondents who believe global growth will increase over the next five years, although there is an increasing expectation that this growth will come with some choppiness.
Technological advances and changes in the environment, including climate change, are expected to cause increased disruption over the next five years, according to substantial majorities of respondents. This disruption is also expected to extend to geopolitical arenas, with 70% of respondents anticipating an increase in geopolitical disruption over the next five years.
The survey also reveals a retreat in globalisation, with 35% of respondents expecting a decrease. However, it's worth noting that these expectations were formed before the result of the US election was known.
Jame Fowler, head of regional and advisory sales at Schroders, stated that it is encouraging to see a renewed sentiment towards investing. The second highest asset class, in terms of the proportion of advisers expecting an increase in client allocations, is developed international equities, with around a third of adviseres expecting an increase.
The survey findings also highlight an expectation of increased market volatility over the next five years, with 43% of advisers anticipating this. Nearly 40% of advisers expect their clients to decrease their allocation to cash, suggesting a shift towards more aggressive investment strategies.
In conclusion, the Schroders 2024 Financial Advisers Survey provides a comprehensive overview of the investment trends expected for the coming year. The findings suggest a renewed interest in emerging markets, a shift away from cash holdings, and a general optimism towards UK equities and global growth, albeit with an expectation of increased volatility and disruption.
Savings yields are expected to slightly outperform stocks and shares, according to the survey's projections, with cash savings expected to yield around 6.6%.
Investing in UK equities is tipped to increase over the next 12 months, with more than 35% of financial advisers expecting their clients to increase their investment in these stocks.
Despite a retreat in globalization, developing international equities are the second highest asset class, in terms of the proportion of advisers expecting an increase in client allocations.
The survey findings also indicate that nearly 40% of advisers expect their clients to decrease their allocation to cash, suggesting a shift towards more aggressive investment strategies, possibly due to the expectation of increased market volatility over the next five years.
