With Donald Trump’s administration increasingly wrapped up in controversy, US equities saw sentiment turn negative and recorded the biggest fall of all asset classes in August down from 0.85% to -2.54%.
The US has also seen the biggest downwards swing in sentiment year-on-year, with the figure down more than 13% on the same time in 2016.
Instead, investors have become steadily more optimistic on the prospects for UK gilts with sentiment growing increasingly more positive, rising from -9.77% to -2.28%.
Gold held an extremely high sentiment with more than 40% of investors positive on the outlook for the asset class, while cash predictably slumped with sentiment at below -30%.
Emerging market equities remained a popular choice with sentiment rising 5.1% to 21.05% in August, marking a 5.13% year-on-year increase.
UK property also received some positive attention with sentiment at 13.33%.
Opting in
Markus Stadlmann, chief investment officer at Lloyds Private Banking, said: “We may have seen the UK electorate opting out of Europe, but when it comes to equities at least, UK investors are seemingly tempted to opt in.
“The second ‘eye catcher’ for us concerns emerging market equities. UK investors are taking more of a shine to them, and so are we.
“Having generally minimised our exposure to emerging markets for a number of years, we have been increasing our allocation to EM equities (and bonds) during the last 15 months. We feel that long-term valuations are showing as fair, while investment risks are significantly below historic levels.”
Sentiment rebound
Overall investor sentiment rebounded in August and rose from 2.59% to 4.92%, which while still below the levels seen earlier in 2017 was significantly up on the 1.53% seen 12 months ago.
Stadlmann added: “Generally speaking, the rebound in overall sentiment since last month was rather underwhelming although not unexpected. Much like the weather at this time of year!”
