Financial intermediaries across Europe are eager to invest in ESG but are less like-minded when it comes to asset class preference
Sustainability is high on the list for financial intermediaries across Europe, but there are still significant differences between countries with regards to the asset classes intermediaries prefer, research by Fundamental Media has found.
Fundamental Research surveyed 768 financial intermediaries in the UK, Italy, Germany, France and Spain between December 2020 and March 2021.
ESG is widely sought after by intermediaries across the continent with between 70% and 87% of intermediaries expecting to increase their allocation to sustainable investing over the next 12 months.
The huge interest in ESG was borne out by our other data as well.
Our social media research shows a continuing interest in sustainable investing from investors. An ever-increasing number of asset managers have also started specifically advertising their ESG credentials, with Q4 2020 seeing a record number of ESG advertisers in market.
Three quarters of Spanish intermediaries expect to increase their allocation to active management, which is significantly more than the 42% of UK intermediaries. Half of UK respondents expect to keep their clients’ exposure to active management the same. Overall, UK respondents are expecting the least changes to their clients’ portfolio, with more than 50% of respondents answering ‘stay the same’ for all management styles, except ESG. For effective and efficient use of media budget it is vital for asset managers to understand these local differences and act upon this information.
Exposure to equities expected to increase
When it comes to investing in specific asset classes, the overall trend among intermediaries seems to be towards more equities and less fixed income and real estate, although the extend to which this trend is visible varies from country to country.
With regards to equities, we see a specific interest in allocating more to emerging market equities, with between 43% and 78% of intermediaries expecting to increase their allocation depending on the country. Emerging market equities seem particularly relevant in Italy (78%) and Spain (73%), but less so in the UK. Although, still 43% of UK intermediaries expect to increase their emerging markets allocation.
After emerging market equities (66% across Europe), it is global equities that intermediaries expect to allocate more to (57%) followed by European equities (44%). This last percentage is much lower among UK intermediaries (22%).
Across the board, we see that UK intermediaries are keener on maintaining the majority of their current asset allocation. This is in line with their response to the question on management styles. Roughly two thirds of the British intermediaries expect the allocation to the different asset classes to remain the same with the exception of global equities (52%), UK equities (47%), emerging market equities (51%) and real estate (45.3%).
The increased interest in equities was also apparent in our social media research, which found that investors were very interested in the themes 'fixed income' and 'portfolio allocation' during the start of the pandemic, when uncertainty was at its peak. However, as the crisis unfolded and intermediaries believed we are getting closer to the end of it, they became more interested in 'equities'.
While our intermediary research found less appetite for increasing allocations to fixed income across Europe, we see massive differences between countries in the attitude towards this asset class specifically. While 60% of UK intermediaries expect their clients’ exposure to fixed income to stay the same, 58.6% of German respondents expect a decrease.
These results show that for advertising and media strategies there is no one-size-fits-all in Europe. Asset managers will have to take the time to understand the local dynamics of demand and tailor their approach to cater for these local differences.
Running activities in Spain can be very different from running it in, for example, the UK. The trick is to find and leverage common factors like the demand for ESG and equities, while tailoring the campaign platform in close collaboration with local sales and marketing teams.
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