Eurozone deflation is the biggest risk facing UK investors according to key institutional clients at the Schroders Institutional Investor Conference hosted by Neil Walton, head of the UK Business Development Group.
The conference, which took place at the Savoy Hotel last month, saw over 200 pension scheme clients; consultants and trustees share their views on key industry issues.
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The results were as follows:
The UK economy
What is the biggest macro risk facing investors today?
An overwhelming majority of 41% felt that the biggest macro risk facing investors is deflation in the Eurozone. 25% believed the biggest risk to be a hard landing in China, 23% pointed to the troubles in Russia, sighting a breakdown in relationships between Russia and the West and 11% felt much higher inflation was the biggest risk.
When do you think UK interest rates will rise?
44% predicted an interest rate rise from the Bank of England in the second half of 2015, with 37% anticipating an earlier rate rise in the first half of 2015. 15% of attendees predicted a rise in 2016 with only 5% signalling a later rise.
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What is your investment horizon?
61% said their investment horizon was five years and over, 32% stated between 3-5 years and only 7% had an investment horizon of 1-3 years.
Which of the following methods would you advocate to mitigate downside in an equity dominated investment portfolio?
63% of attendees would diversify across multiple asset classes, 19% would appoint an active manager with the ability to reduce volatility and drawdowns, 9% would purchase hard protection e.g. a put option, or a capital guarantee and 4% would invest in hedge funds.
Responsible investing
Do you consider ethical, responsible or sustainable options when making investment decisions?
39% stated that they did not consider ethical, responsible or sustainable options when making investment decisions at present. 35% did take these factors into consideration and 26% responded ‘I don’t know or partially’.
Would you accept some underperformance for responsible investing?
62% of attendees would accept some underperformance for responsible investing under some circumstances, with 32% stating they would not. 6% stated that they would always accept some underperformance for responsible investing.
Neil Walton, Head of the UK Institutional Business Development Group said:
"With all of the short-term pressures on our clients, it was very pleasing to hear that many retain a longterm investment horizon and support diversification; two concepts that we thoroughly support."
