A new study by Principal Asset Management has identified Central Bank missteps as the primary risk to portfolios in 2024, with 68% highlighting this concern.
This insight is part of a broader survey of 400 advisers across France, Germany and Switzerland aimed at understanding strategic asset allocation in the current market.
UK advisers express more concern about Central Bank policies compared to their European counterparts, who focus on diverse issues like a tight labour market in Germany and deflation in Switzerland.
Meanwhile, UK advisers plan to reduce allocations to US equities, with 35% intending to decrease their exposure and shift their focus towards private equity and fixed income.
Over one-third of UK advisers (37%) expect to increase private equity allocations, the highest among surveyed markets.
There’s also an inclination to increase allocations to government bonds, investment-grade credit, high-yield credit and emerging market debt.
The study also reveals a strong home bias regarding real estate investments among advisers across all surveyed markets. In the UK, the most attractive real estate subsectors for risk-adjusted returns are mixed-use, data centres and retail.
Seema Shah, chief global strategist, Principal Asset Management, said: “The post-pandemic recovery is starting to ebb as global storm clouds gather. The global outlook looks troubled as rising rates, oil prices and the US dollar threaten to exacerbate economic slowdowns.
“Diversified asset allocation is critical as market uncertainties grow. This research sheds light on the challenges advisers face when allocating on behalf of their clients and the unique approach different European markets are taking to weather the storm.”
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