Expats buying UK shares as economic gloom lifts

by Ray Clancy on June 17, 2014

British expats are shifting their investment portfolios from risk averse assets into stocks and shares as they become more positive about equity markets around the world — particularly the UK — new research shows.

The survey for Lloyds Bank Private Banking showed that in 2010, expats held an average of 17.5% in equities, 4.2% of their portfolios in corporate bonds and 2.3% in government bonds, but this has now changed to 19% in equities, 3.6% in corporate bonds and 1.8% in government bonds.

45% of those surveyed said they felt their portfolio was in a better position now than in 2012

Of those surveyed, some 45% said that they actively invest in stocks and shares and felt their portfolio was in a better position than in 2012, with 34% saying their portfolio was well diversified and 22% saying it wasn’t.

Of those that chose to invest their assets in the UK, only 10% chose to decrease their portfolio and 16% to increase it, with 74% opting to remain the same.

Those in the United Arab Emirates and the USA were the most optimistic about their investments, with 43% and 37%, respectively, holding a positive outlook, with those based in the UAE and Spain holding the majority of their equities in the UK stock market. Expats in New Zealand and Canada hold the least amount of investments in the UK, which could be put down to emigrants in these countries migrating permanently as opposed to temporarily.

‘It’s good to see that British expats are feeling better about their investments and focusing on returns,’ said Richard Musty, International Private Bank Director, Lloyds Bank.

‘Expat life has its own unique financial pressures, but equally, living abroad gives expats easier access to many markets and investments that will help them grow or receive income from their assets. However, with the FTSE performing strongly over the past year, the attraction to invest in the UK is strong,’ he added.

The trend towards UK equities is consistent with Lloyds Investor Sentiment Index, which has shown that over the past year, positive net sentiment has risen 27% from 17% to 44%. This is compared to the highest mover, emerging market equities, which showed a 34% increase; however, this was from 46% — a 12% decrease.

Over half of those surveyed responded that a proportion of their investments are in the UK, with 24% holding the majority in the UK, while just under 10% had between 90-100% of assets invested in the UK.

‘Expats have clearly seen the opportunities offered in stock markets in the UK and abroad, and with little sign of equity inflows abating, our view is that there is still some way to go before the current popularity of stocks subsides,’ said Musty.

‘Given the ease in which retail investors can trade nowadays, it’s important that when deciding a destination for these investments people do their research, make sure they are familiar with market movements and any investment plan is part of a well-diversified portfolio,’ he added.


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