Are Savers Moving Their Funds Overseas?

Brexit concerns are motivating some investors to look for greener pastures.

In September & October the "UK All Companies" sector experienced outflows of £335 Million, compared with funds investing in Europe, Japan, North America and globally, which attracted £2.2 Billion in new inflows (Investment Association, December 2017).

Europe and Japan were a particular focus for investors, attracting £660 Million and £440 Million respectively.

This could be due to the fact that the FTSE has returned 9% year-to-date, which doesn't compare favourably with the double digit returns achieved in Japan, Europe and the US (James Connington, Telegraph, December 2017).

However, according to Tom Becket of Psigma, investors have missed out on the best of the recovery that Europe has experienced by moving in now: "The time to be positive on European shares was two years ago when everyone hated them and couldn’t see any positives."

Some commentators have raised the possibility that Japan's 30 year era of lacklustre growth could be ending, which may entice some investors, however whether this eventuates remains to be seen.

According to Sarah Whitley of Baillie Gifford's Japan Trust, Japan is the antithesis of the UK at the moment, as Japan is implementing more lenient immigration rules and looking to join free trade blocs.

Japan has recorded impressive returns over the past five years, with the Topix index returning 124% valued in sterling (James Connington, Telegraph, December 2017).

Perhaps due to the UK's ongoing political uncertainty, UK stocks are now cheap according to Tom Becket of Psigma, who will most likely move his focus back to the UK due to the attractive valuation levels available.

It's important that your investments are well diversified and suitable to your needs and objectives as part of a comprehensive financial plan. Contact Westminster Wealth today to put yours in place.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

Past performance is not a reliable indicator of future performance.

Back