IFAs point to emerging markets and UK equities for future growth

  • Virgin Money launches Investor Intentions Index 
  • Cash most popular investment sector for IFAs in Q1 2008   

IFAs are looking to emerging markets and UK shares when advising their clients over the next three months in the face of ongoing stock market volatility, according to the new Virgin Money Investor Intentions Index*. 

IFAs highlight the two sectors as the ones to watch despite the recent FTSE** rollercoaster ride – from May 1st to May 19th the FTSE gained 4.7 per cent, only to slide back down to be around 7.4 per cent lower than the 6,087.3 level achieved at the beginning of May 2008. 

The Virgin Money Investor Intentions Index will track IFAs’ confidence in ten different investment sectors on a quarterly basis as well as where they advised their clients to invest their money over the preceding quarter. 

The first results show that in the previous three months most IFAs advised their clients to invest in cash or UK shares. Around 76 per cent of IFAs said they had advised their clients to put money into cash while 73 per cent pointed customers towards UK shares, the nationwide survey shows. 

Gold was the least popular investment sector in the last quarter, with only 40 per cent of IFAs saying they had advised their clients to invest in gold stocks. 

The Virgin Money Investor Intentions Index tracks ten sectors in total. These are: UK shares, European shares, green investments, cash, commodities, property, bonds, Far East, emerging markets and gold. The index details advice over the last 3 months and investment intentions for the next quarter (tables). 

Scott Mowbray, spokesman at Virgin Money, said: “Funds investing in emerging markets are attracting a lot of attention at the moment, particularly from institutional investors looking to capitalise on higher than expected returns and the improved political stability in some developing countries. 

“Concerns about UK inflation and predictions that the Bank of England may be forced to raise interest rates have hit the FTSE and lead some commentators to predict stormy waters ahead. However our first Investor Intentions Index demonstrates that IFAs remain confident enough about the long-term outlook for UK shares despite the short-term volatility, to advise their clients in that direction over the coming three months.” 

The past quarter has seen a range of mixed signals on the world and UK economic outlook with concern about rising inflation the dominant factor after the Consumer Prices Index hit 3.3 per cent above the two per cent target the Bank of England has to maintain. That has sparked concern about interest rates having to be increased despite growing evidence of a UK economic slowdown. Despite this economic backdrop retail sales figures for May showed an unprecedented 3.5 per cent increase which was the highest since 1986. 

The Virgin Money Investor Intentions Index tracks both short-term and long-term trends and crucially it also measures IFAs’ long-term confidence in various sectors. 

IFAs are not optimistic that gold, property or commodities will play a part in their clients’ portfolios in the coming months. Green investment opportunities however look to be gaining traction with IFAs with a more positive outlook over the next three months. Virgin Money believes this is down to increased fund choice and recognition that going green is not only beneficial for the environment but offers good returns too. 

- Ends -

Notice to editors:

* IFA interviews were conducted by George Street Research in May 2008. A total of 100 interviews were completed amongst a cross-section of advisers throughout Great Britain with a weighting towards those whose business is primarily with investment clients. Quotas were imposed on the total sample in respect of size of IFA firms, region and areas of specialisation. 
** FTSE historical data

For further information
Kevan Reilly/Billy Partridge/Holly Clark, Citigate Dewe Rogerson
Firstname.lastname@citigatedr.co.uk 0207 638 9571 

Scott Mowbray at the Virgin Money Press Office
Scott.mowbray@virginmoney.com 01603 215909

About Virgin Money

Virgin Money is Virgin’s financial services arm and was established in 1995.

Virgin Money has over two million customers and offers a wide range of financial products across lending (e.g. credit cards and personal loans), savings (e.g. deposits, investments and pensions) and protection (e.g. life insurance, home insurance and car insurance) to the UK market.

Virgin Money Personal Financial Service Ltd is authorised and regulated by the Financial Services Authority (FSA). Registered Office: Discovery House, Whiting Road, Norwich NR4 6EJ. Registered in England no. 3072766. Entered on the Financial Services Register (www.fsa.gov.uk/register), Register Number: 179271