Two out of three UK institutional fund managers say that over the next 18 months their allocation to US equities will either stay the same or increase, says a survey of thirty institutional investors running $652 billion by Cubitt Consulting. Only in the short term will the UK and Europe benefit from the current turmoil on Wall Street, with half of respondents saying they see the domestic market as a safe haven and only one in five keen on stagnating Continental Europe. Long-term confidence in US equities remains high. A big majority reckon the US accounting scandals will lead to reform of European accountancy regulation.
“It will be a surprise to many that the UK’s institutional investors are so confident of the US equity market and at the same time expect to see a tightening of regulation in Europe ,”says Simon Brocklebank-Fowler, a partner at Cubitt Consulting .
Among the comments from fund managers surveyed were :
“European accounting practices and levels of disclosure will have to improve.”
“Scandals are not endemic. The majority of US companies are honest, so we will not be deterred from investing.”
“The long-term risk of investment in US equities has not increased at all. We are simply seeing a return to the risk of pre-internet bubble days.”
“The UK and the rest of Europe are the safest short-term markets for equity investments. The equity and capital markets are more developed, which means that investors are better able to scrutinise and call management to account.”