Market volatility here to stay, say IFAs

More than half of IFAs expect market volatility to last a minimum of six months, with almost a fifth anticipating at least another year of turmoil,

according to research from the investment protection specialists at Barclays Wealth.

Forty per cent of advisers surveyed by the company in late November* said they expected volatility to last between six months and one year, with a further 17 per cent predicting at least another 12 months of turbulence.

Just over a quarter - 27 per cent - expected markets to remain rocky for three to six months while 14 per cent anticipated further instability for one to three months.

Just 2 per cent thought markets would return to normal within weeks.

Although most advisers expect equity markets to experience a rough ride well into 2008, many believe that equities - particularly international equities - will be the best performing asset class over the next three months.

Forty-eight per cent of advisers in the survey believed international equities will outperform other asset classes over the next 12 weeks, with 14 per cent plumping for UK equities.

Twelve per cent thought cash will perform best over the period while 10 per cent expected international property to outstrip other asset classes.

Just 8 per cent believed that fixed income will perform best while virtually none - 2 per cent - went for UK property.

Seven per cent selected the 'other asset class' category.

Colin Dickie, director, Barclays Wealth, says: "Volatility is a huge concern for advisers and there is clearly a widespread belief that it is not going to end any time soon.

Preserving investors' capital in these conditions has become a real challenge for advisers, particularly those with clients exclusively invested in unprotected equities.

It is interesting to note that advisers, despite their volatility concerns, are largely agreed that equities will perform best over the coming months.

International equities are clearly a key focus at the moment as investors shy away from UK equities and property.

*119 advisers responded to the survey.

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