In a year that has seen a UK general election and has a US presidential election on the horizon, the latest wealth manager sentiment survey from Asset Risk Consultants (ARC) shows that the net sentiment towards equities has increased to 57% from -22% over the past 12 months.
With the third quarter underway, 63% of the 90 CIOs of wealth management firms that took part in its latest survey expressed a positive view on equities compared to just 13% this time last year.
The swing in positive sentiment suggests that investment managers are unfazed by this year’s election fever and have greater clarity on the direction of travel for interest rates and inflation – many anticipate a soft landing in the US rather than a full-blown recession, which wasn’t being discounted this time last year.
Grant Wilson, CIO at investment consultancy ARC, said: “Elections can drive market volatility and the UK’s fiscal outlook will be top of mind for investors given the ghost of the 2022 mini budget, the pledge from Labour to respect the fiscal rules and the lack of headroom against fiscal targets. With Labour prioritising higher taxes to finance welfare spending and fiscal consolidation, some analysts suggest that the new Government’s proposals could boost demand growth relative to current policy.
“The near term the impact of a new government on the UK equity market is likely to be fairly limited as we are told that only 17 per cent of MSCI UK revenues are actually generated in the UK. In the medium to long term, reforms could create a more favourable business environment and support sectors with a high domestic exposure. However, the longer-term outlook is more uncertain, with the US election likely to have a far greater impact on the global economy, which could influence bond yields and potentially lead to higher interest rates in 2025.”
