Brexit has split financial advisers into two camps with more than a quarter (27%) believing that UK equities will generate the best returns for their clients over a three to five year investment period, according to research from pension and insurance giant Aegon UK.
However, a further quarter (24%) said UK equities were the most overvalued asset class.
Those who were positive about outcomes for the asset class focused on economic fundamentals, exposure of UK companies to global markets and the potential for an improving situation as Brexit negotiations progress.
In contrast, those who expressed caution were concerned about recent sterling falls and the potential for a market correction amid ongoing Brexit uncertainty.
The eurozone has been buoyed by the strongest economic growth seen in the bloc since the debt crisis five years ago, stability following recent elections and improved earnings.
Positive sentiment has seen advisers signalling confidence in European equities, with one in five (20%) believing that the asset class will generate the ‘best return’ for their clients over a three to five year investment period compared with just 6% four months earlier. Just 2% believe the asset class is the most overvalued.
Nick Dixon, investment director at Aegon UK, said that, while many developed asset classes are currently perceived as overvalued, UK equities appeared to offer relatively better value.
He added: “Market fundamentals remain broadly unchanged following the vote to leave the EU, despite speculative activity and the recent fall in sterling.
“For those that can invest in the medium to long-term the UK market remains attractive, as any short-term uncertainty caused by the nature of future trade deals with the EU will only partially impact large cap companies, who are more likely to trade internationally.”
©2017 funds europe
