Optimistic Outlook

Published 10 March 2014

Building on a 14% rise in 2013, 72.8% of investors expect the blue-chip index to rise by at least a further 5% in the next 12 months taking it past the 7,000 barrier and beating the all-time closing high of 6930.2 set during the dotcom boom on 30 December 1999.

More than two in five (41.5%) expect the FTSE 100 to rise by more than 10% in 2014, while only one in 10 (10.7%) expect the index to fall by more than 5% this year.

Investors are currently retaining a strong preference for equities, at the expense of bonds, property, alternatives and cash, according to CoreData Research’s latest i-Sight Investor Attitudinal Barometer, which is done on a bi-annual basis to assess investor intentions for the next six months.

The score for each asset class is based on the likelihood of active investors putting money into funds of that style. A score between 50 and 100 can typically be interpreted as bullish, while a negative score means investors are bearish on an asset class and anything less than 50 shows investor uncertainty.

Also taken into account by CoreData Research is the amount the score for each asset class has fallen or risen compared to the previous study, as this indicates how much opinion has improved or worsened.

In particular, attitudes towards UK shares have seen a significant rise, with the asset class witnessing a further 15 point uptick in investors’ opinion to +66. This indicates investors are much more interested in UK shares that they were six months ago.

The attitude towards international shares was mixed, with improving sentiment to European equities offset by concerns around emerging and frontier markets. The asset class recorded a 21 point drop, but retained a positive sentiment of 30.

Alternatives are now floundering at the bottom of investor opinion towards asset classes, after seeing a fall of 23 points from the previous study to -40 for the next six months.

Cash/Money Markets have also moved into negative territory after a -12 fall in sentiment gave the asset class an absolute score of -10. Sentiment towards property (-7) and bonds and fixed income (-17) also fell in to further negative sentiment with absolute scores of -23 and -24 respectively.

Angele Spiteri Paris, head of UK at CoreData Research said: “Despite seeing strong performance from UK equities in 2013, many investors believe the slow pace of economic recovery means there is plenty more gas in the tank for UK shares compared to other markets where there are more clouds on the horizon.”

The regional outlook also reflects the strong belief in the UK. Only two regions – the UK and Europe – saw an increase in appeal, with some sharp drops in other parts of the globe, particularly the emerging and frontier markets.

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Inigo Rudio