Industry Voice: The trend towards global equities is likely to continue

The argument for diversification is unambiguous given the uncertain economic backdrop

clock • 1 min read
The global equity sector has continued to see inflows
Image:

The global equity sector has continued to see inflows

Worries about rising inflation, low-to-no growth and geopolitics have all contributed to significant volatility across the major asset classes.

In this context, the argument for diversification is unambiguous. Going global reduces country-specific risk and provides access to a much broader set of opportunities and investment themes.

This is a particularly important consideration for UK equity investors - more than 50% of the FTSE All Share is comprised of financials, industrials, materials and energy, with relatively low exposure to more innovative areas like technology and communication services. Such sector bias has the potential to have a meaningful impact on risk and return over time.

Against this backdrop, it should come as no surprise that an increasing number of investors are already starting to recognise the benefits of going global. Indeed, IA data shows that the IA Global and Global Equity Income sectors are both firmly among the top 10 net selling IA sectors over the 12 months to the end of July.

We expect this trend to continue going forward given the uncertain economic and investment backdrop.

For more on global equity investment, enter your details below and read our exclusive guide: Going Global in Challenging Times

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