Planners look to US for growth

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Financial planners are now allocating more new client investments to international assets than at any time since the global financial crisis, according to a report from Investment Trends. 

Based on a survey of 734 financial planners between July and August, the August 2013 Adviser Product and Marketing Needs Report showed a growing trend away from cash and towards growth assets. 

Between 2012 and 2013, the allocation of new client investments to international assets jumped five percentage points to 31 per cent of new client investments, the highest since 2008. 

Client demand and planner recommendations seem to have pushed the growth. 

“Our research confirms that improved investor confidence and low interest rates have prompted planners to cut allocations to cash and direct more capital towards listed investments and other growth assets,” Investment Trends senior analyst Recep Peker said. 

“Now an increasing proportion of that money is being invested offshore.” 

Peker said better performance of overseas markets has seen a spike in investor confidence over the last year. 

The report said the proportion of sophisticated investors looking to increase rather than decrease their exposure to international shares jumped 15 percentage points between August 2012 and August 2013, from 3 per cent to 18 per cent. 

The United States is looking particularly attractive to investors and planners as the North American economic recovery gains pace, with 40 per cent of planners saying they would invest there or in North America, up from 10 per cent in 2009. 

But interest in China has fallen, with only 12 per cent of planners looking to recommend single-region Chinese exposure, down from 35 per cent in 2010. 

Exchange traded funds are growing in popularity, with offshore investment made through ETFs growing 40 per cent over the last year, increasing from 5 per cent to 7 per cent of all investments.  

Thirty per cent of planners said they would like to access the US through ETFs.

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