Investors showing UK bias to stocks, study finds

UK investors are still showing a bias to UK stocks despite persistent long-term underperformance, new research from Quilter Investors has revealed.

A study among investors with at least £60,000 in investible assets found that of those who claim to know where they’re invested, 64% have more than 25% of their portfolio invested in the UK – the worst performing major equity market of 2020.

Around 8% of investors claimed to have all their eggs in the UK’s basket, while 46% had more than 50% of their investments in the UK, the findings revealed. There were also over a quarter (26%) of those surveyed that did not know where their money was invested.

Quilter Investors, whose survey had 1,041 responses, stated that the performance of UK stock markets has “lagged behind” global peers over recent years as a result of the COVID-19 pandemic and the fallout from the EU referendum in 2016.

“There is great efficacy in holding a sterling-based portfolio as this helps to remove the currency risk associated with holding overseas investments,” Quilter Investors investment expert, Danny Knight, commented. “Naturally this will lead to a higher UK exposure to other regions, but investors need to be careful they aren’t holding too much with just one region, even if is your own country.

“People often like to see the names of companies they know in a portfolio as they can easily equate where their money is going or feel a sense of shared prosperity when that company does well. But this is not a strategy that is likely to pay off in the long-term.

“Global diversification is as important as asset class diversification, and given how we expect the global recovery to play out it will not just be the UK that will see strong economic growth and demand. Ensuring you don’t have a home bias will be important to make the most of this rebound.”

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