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Optimism about emerging markets surges among IFAs

  • Virgin Money Investors Intentions Index shows advisers more optimistic about Far East than UK shares

IFA optimism about Emerging Markets and Far East shares now outstrips optimism about UK shares as scepticism about the UK economic recovery grows, according to the latest results from the Virgin Money Investor Intentions Index.

Around 42% of advisers are optimistic about Emerging Markets – up from 32% three months ago – ahead of 26% who are optimistic about the Far East and 23% who are optimistic about UK shares. Optimism about the Far East has climbed from 22% while the UK has dropped from 30%.

And the year-on-year figures show an even bigger turn around with the UK dropping from 39% in February 2009 while Emerging Markets has climbed 25% and the Far East by 10%, according to Virgin Money’s research. Just 10% of advisers feel optimistic about bonds compared with 52% a year ago.

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

The index shows 74% of IFAs are advising clients to invest in UK shares – down from 83% in December 2009 – while 73% are advising them to invest in the Far East and 73% in Emerging Markets. In December 72% chose the Far East while 75% backed Emerging Markets.

The research shows a switch away from risk-averse investments – just 54% are advising clients to invest in cash while 66% are advising bonds. In December 58% were advising cash while 77% were backing bonds.

Virgin Money spokesman Grant Bather said: “The MSCI Emerging Markets index has returned 57% in the past year and while some commentators are concerned about a bubble in the traditional emerging markets such as China and India, advisers are still more optimistic about the sector than any other.

“Clients will always be more likely to invest in UK shares than other markets but it is clear that optimism about the performance of the UK is low among advisers. The Far East and Emerging Markets are regarded as better bets for outperformance in a year which will see a UK election and the uncertainty that causes.”

SECTORPERCENTAGE FEELING MOST OPTIMISTIC ABOUT SECTORCHANGE ON LAST QUARTERCHANGE ON LAST YEAR
UK Shares23%-7%-16%
Far East26%+4%+10%
Emerging Markets42%+10%+25%
Bonds10%-2%-42%
European Shares13%-5%-6%
Property14%+4%+2%
Cash1%-5%-16%
Green Investments4%Unchanged-8%
Commodities5%-7%-3%
Gold4%-2%-9%

Optimism about European shares has been hit by the ongoing debt crisis in Greece and fears it could spread to other economies in the so-called PIGS – Portugal, Ireland, Greece and Spain. Just 62% of IFAs are advising clients to invest in European shares compared with 75% in December 2009.

Around 43% of IFAs are advising clients to put money into Green Investments up from 40% in December last year. Optimism about Property has increased with 14% optimistic about the sector over the next three months compared with 10% at the end of 2009.

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 (tables).

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* IFA interviews were conducted by George Street Research in February 2009. 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/Chris Jarvis, Citigate Dewe Rogerson
firstname.lastname@citigatedr.co.uk 0207 638 9571

About Virgin Money

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 is on 25 April 2010. 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.