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IFA confidence in UK shares grows

  • But Virgin Money Investors Intentions Index shows advisers are more optimistic about Emerging Markets and Far East

More than four out of five IFAs will recommend investing in UK Shares to clients over the next three months as confidence in the long-term prospects of the UK economy grows despite recent volatility, Virgin Money’s Investor Intentions Index shows.

The numbers of advisers recommending UK Shares has grown to 83% in the past three months from 74%, putting the UK market clearly ahead of Emerging Markets and the Far East as the best homes for clients’ cash.

But advisers are more optimistic about the prospects of long-term returns from Emerging Markets and the Far East with the UK languishing in third place, the nationwide study of IFAs’ views on investment prospects shows.

It shows optimism is highest at 38% among IFAs about the prospects of Emerging Markets while 31% were confident in the Far East and 24% confident in UK shares. Just 4% are optimistic about the returns from Cash.

Virgin Money’s authoritative Investor Intentions Index tracks which sectors independent financial advisers are recommending to clients in 10 different investment sectors as well as where they advised their clients to invest their money over the preceding quarter.

Advisers are still most likely to recommend UK Shares to investors over the next three months and the number backing the UK as the best home for investors is up on February and on the same period last year. Around 78% of advisers will recommend Emerging Markets and 76% the Far East – up 20% respectively on the same period last year.

Virgin Money spokesman Grant Bather said: “Uncertainty reigns ahead of the UK Government's emergency budget. IFAs say they are most likely to recommend UK shares but are most optimistic about returns from Emerging Markets and the Far East.

“However UK Shares remain to some extent a safe haven and are a known quantity for investors and advisers. The UK has avoided so far the worst of the Eurozone debt crisis and the Coalition Government is building some support in the markets for its plans to cut public sector debt.

“There remains an appetite for risk and the interest in the Emerging Markets and the Far East shows that investors and advisers are keen to seek out strong returns.”


SECTORRECOMMENDED FOR THE NEXT THREE MONTHSCHANGE ON LAST QUARTERCHANGE ON LAST YEAR
UK Shares83%+9%+6%
Emerging Markets78%+5%+20%
Far East76%+2%+20%
Bonds72%+6%-3%
European Shares63%+1%+7%
Cash62%+8%Unchanged
Property62%+4%+28%
Commodities51%+12%+15%
Gold41%+2%+14%
Green Investments38%-5%+4%

With confidence in the prospects for European markets having been hit by the recent debt crises in the so-called PIGS – Portugal, Ireland, Greece and Spain – investors continue to avoid the market with only 63% of IFAs intending to advise clients to invest.

More than half (51%) of IFAs are likely to advise clients to put money into commodities this quarter – an increase of 12%. The only sector which saw a decrease in number of IFAs intending to recommend it was Green Investment, decreasing from 43% in Q1 to 38% now.

The Virgin Money Investor Intentions Index tracks 10 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.

-Ends-

* IFA interviews were conducted by George Street Research in May 2010. 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.


For further information:

Kevan Reilly, Citigate Dewe Rogerson
Kevan.Reilly@citigatedr.co.uk 0207 638 9571

Chris Jarvis, Citigate Dewe Rogerson
Chris.Jarvis@citigatedr.co.uk 0207 638 9571

Toby Clark, Citigate Dewe Rogerson
Toby.Clark@citigatedr.co.uk 0207 638 9571


About Virgin Money:

  • Virgin Money is Virgin’s financial services arm and was established in 1995 as a joint venture between the Virgin Group and Norwich Union.
  • In 1997, Virgin Direct Personal Financial Services Limited launched The Virgin One Account, a joint venture with The Royal Bank of Scotland that offered the UK’s first current account mortgage direct to the retail market. In 2001, RBS bought out the Virgin Group’s stake in the joint venture.
  • In April 2004 the Virgin Group took 100% ownership of Virgin Money.
  • Virgin Money currently has over 2.5 million customers and offers Payment Cards (Credit Cards & Prepaid Cards), Savings and Investment products (Stakeholder Pensions, Children’s Pensions, Employers Pensions, FTSE Tracker ISA, Bond & Gilt ISA, Climate Change ISA, Cash ISA, and Unit Trusts), General Insurance products (Motor, Home, Travel, and Pet) and Life Assurance products to the UK market.
  • Virgin Money’s brand ambition is to make “everyone better off” – this philosophy underpins our approach to business by offering good value to customers, treating employees well, making a positive contribution to society and delivering a profit to shareholders.
  • Virgin has signed a five-year deal to be the official sponsor of the London Marathon, the biggest annual fundraising event in the world. The inaugural Virgin London Marathon was on 25 April 2010. The 2011 Virgin London Marathon is to be held on 17 April 2011. Virgin Money, the financial services division of the Virgin Group is leading the London Marathon sponsorship with the ambition to help runners raise £¼ billion over 5 years and will use its infrastructure, online capability and financial expertise to deliver that through Virgin Money Giving.