Adviser demand for passive strategies on the rise

The survey – which interviewed 768 advisers on issues relating to their product and marketing needs – found that fewer advisers advised their clients to invest in cash in 2014, instead favouring passive equities investment.

“We’re currently going through an interesting period where the average investor’s capital gain expectations from domestic equity markets is deteriorating, but at the same time there are many more who are seeking growth in their portfolios, perhaps because of suppressed yields,” said Investment Trends senior analyst Recep Peker.

“Planners are addressing this need by targeting growth through diversification, with an increased preference for simpler products and passive strategies.

“Planners’ usage of indexing/passive investing is now at the highest level observed since we began measuring this in 2010.”

In addition, advisers placed 33 per cent of new client investments in international assets over the last year, up from just 26 per cent in 2012, with multi-region funds more popular than single-region investments such as managed US equities funds.