Investor sentiment reaches highest level since April 2016
Asset class performance is also up on last month with nine out of 11 asset classes in the same or in a stronger position.
Gold jumps to extreme levels with a 47.54% positive sentiment score
UK investor sentiment has reached its highest level since April 2016 and now stands at a record 6.66%, an increase of 6.23% on last year and 2.42% higher than last month. Investors are increasingly bullish despite ongoing geopolitical uncertainty against the backdrop of multiple elections across Europe.
Investor confidence in a number of asset classes increased in May with sentiment towards gold rising from 38.61% to 47.54%. US equities in particular saw a reversal of fortunes, rebounding from negative sentiment levels in April, to reach 6.38%.
Despite the uncertainty caused by the announcement of the forthcoming ‘snap’ election, sentiment towards UK asset classes remained broadly positive with UK corporate bonds and UK government bonds seeing an increase of 3.17% and 2.63% respectively. Only UK equities experienced a slight dip in sentiment but investors still have a bullish outlook, scoring it 8.68% for this month. This was mirrored by UK property which saw a small drop of 0.34% and now sits at 27%.
Emerging markets saw the biggest decrease in sentiment, dipping 2.02% from 18.77% to 16.75%, despite being the best performing asset class last month. It still remains the second most popular choice with UK investors.
Looking across the last year, Japanese equities (up 23.62%), Eurozone equities (up 20.31%), gold (up 17.05%) have seen the biggest increases.
The actual performance of asset classes portrays a more positive picture than last month with nine out of 11 asset classes in the same or a better position than they were 30 days ago. UK property, which is up 4.6%, and emerging market equities, up 3.7%, are the best performers. Commodities, down 2.1% and UK equities, down 0.5%, are the only asset classes in negative territory.
Markus Stadlmann, CIO Lloyds Private Bank:
“This month’s data suggests that things continue to look up. The month of May returns the highest investor confidence in over a year and, in line with this, we remain positive about the health of the UK economy.
In this context, the story we see playing out with global equities is particularly interesting. I am not surprised to note the big rises in confidence for Japanese and emerging market shares that have been recorded over the course of 12 months. Whilst I suspect a degree of ‘over optimism’ may have crept in with US equities, we still consider global equities collectively to be the main ‘performance engine’ for those customers who have portfolios made up of a diverse range of asset classes. This is a long-term call, of course. Over the short term, US equities might see a correction or the uptrend flattening out.
That said, gold – so often seen as the asset class of choice for nervous investors - wins big in the popularity stakes this month. The +47% sentiment score is extreme by our measures and suggests investors aren’t ready to take the armbands off just yet.”