A record high 21 per cent of institutional investors are looking to increase their holdings of UK assets, despite fears over the impact of Brexit, the State Street Brexometer Index has revealed.
State Street's quarterly survey results showed an increase from 13% in Q2, beating the 16% record from Q3 2017.
The number of investors anticipating that Brexit would have a major impact on their business operating model also reached a new high and grew 12% since last quarter, with 26% of respondents believing in a significant impact.
Nevertheless, the overall proportion of investors anticipating any impact is lower than in Q1 2018, falling from 87% to 83%. Investors with a positive outlook for the global economy dropped from 55% to 36% between Q1 and Q2 but has now risen to 43%.
“On balance, the optimists, those planning to increase their holdings, are still winning the day – just,” State Street Global Markets head of global macro strategy Michael Metcalfe said in a statement.
“The story of Brexit so far is that fears of economic disruption and capital flight have been unfounded and investors have been willing to give the UK the benefit the doubt. But the closer we get to the key Brexit deadlines without signs that a deal can be reached, the more likely it is these fears will become a reality that investors will need to adjust too,” Metcalfe said.
According to the survey, 40% of institutional investors believe asset owners will not change their levels of investment over the next three to five years and 37% believe their company will use more cross-border fund locations such as Luxembourg (57%) and Ireland (54%).
Restructuring is the area that will need the greatest help following Brexit, 17% thought, overtaking performance and risk analysis (8%). Regulatory reporting issues such as Solvency II and AIFMD is the most in-need service (28%).
The responses came from 101 professional investors such as institutional and alternative investors, hedge funds, real estate and private equity, surveyed by PollRight.