Advisors Split on Outlook for International Investments, finds Aberdeen Survey

Sep 11, 2013, 10:09 ET from Aberdeen Asset Management

PHILADELPHIA, Sept. 11, 2013 /PRNewswire/ -- While registered investment advisors (RIAs) are divided as to whether or not they plan to add international bonds or stocks to client portfolios over the next 12 months, they overwhelmingly prefer to use actively managed funds to gain exposure to international markets, according to a survey of RIAs and other investment industry experts conducted by Aberdeen Asset Management.

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The Aberdeen Asset Management RIA Survey found that six in ten RIAs plan to increase their allocation to international equities over the next year.  When it comes to international fixed income, 51 percent responded that they expect to add international bond exposure with the remainder not planning to add international bonds to client portfolios. 

"It is no secret that U.S. investor portfolios are generally underweight in international equities and fixed income," said Mickey Janvier, Head of Wealth Management, Aberdeen.  "The risk of being overexposed to any one market is too great for investors planning for retirement and other long-term financial goals.  While advisors remain divided on whether or not to increase exposure to international markets in the coming 12 months, we believe that over the long-term international bonds and stocks should be broadly owned by American investors seeking to diversify and grow their portfolios."

When investing internationally on behalf of their clients, the survey showed that RIAs overwhelmingly prefer to use actively managed funds.  More than three in four (76 percent) are most likely to use actively managed funds to invest outside the U.S., compared to 17 percent that plan to use ETFs and 4 percent that expect to use passive index funds. 

"When investing outside the U.S., there is no substitute for the on-the-ground research capabilities that active managers bring to the table," says Janvier. "Investing in a broad index provides exposure to a broad swath of issuers and companies, not all of which are worth investing in.  The value of active management is the ability to sift through the myriad investment opportunities throughout the world to identify those with the greatest risk-reward potential."

Editor's Note:

The Aberdeen Asset Management RIA Survey was conducted between August 18 and 20 at the 2013 LPL focus13 Conference in San Diego. Respondents were event attendees including Registered Investment Advisors (RIAs) and other investment industry experts. The data is based on responses from 335 respondents.

About Aberdeen Asset Management:

Aberdeen is an independent asset management group. Formed out of a management buy-out in Aberdeen, Scotland, in 1983, we are now a FTSE 100 company, with market capitalization of $8.5 billion and which operates on-the-ground in over 23 countries across Europe, Asia and the Americas.

We are defined by our pure focus on asset management, including equities, fixed income, property and multi-asset portfolios. All our investment solutions are driven by our commitment to straightforward, transparent investment approaches that stress intensive, first-hand research and a long-term view.

As of June 30, 2013, we managed assets of $317.9 billion on behalf of institutional and private investors.

The above is for informational purposes only and should not be considered as an offer, or solicitation, to deal in any of the investments mentioned herein. Any opinion or estimate contained in this document is made on a general basis and is not to be relied on by the reader as advice. Individuals should seek their own professional advice and consider their investment objectives before acting on this information.

International investing entails special risk considerations, including currency fluctuations, lower liquidity, economic and political risks, and differences in accounting methods; these risks are generally heightened for emerging market investments. Fixed income securities are subject to certain risks including, but not limited to interest rate risk, credit risk, prepayment and call risk. Typically, when interest rates rise, there is a corresponding decline in market value of bonds. This effect is usually more pronounced for longer-term securities.

In the United States, Aberdeen Asset Management (AAM) the marketing name for the following affiliated, registered investment advisers: Aberdeen Asset Management Inc., Aberdeen Asset Managers Ltd, Aberdeen Asset Management Ltd and Aberdeen Asset Management Asia Ltd, each of which is wholly owned by Aberdeen Asset Management PLC. "Aberdeen" is a U.S. registered service mark of Aberdeen Asset Management PLC.

SOURCE Aberdeen Asset Management