INVESTING/PORTFOLIO STRATEGIES

Institutional investors largely standing pat on U.K. investments — survey

Union Jack

Two-thirds of institutional investors will maintain U.K. equities, bonds and alternatives holdings over the next six months, according to State Street’s new quarterly Brexometer index launched Thursday.

The survey of 111 institutional investors — money managers and asset owners — gauged their sentiment toward the U.K.’s departure from the European Union prepared by State Street showed that 80% of investors expect Brexit to have an impact on their operating models for the next three quarters. A breakdown of the types of investors was not provided.

A third of respondents believe asset owners will decrease levels of investment risk over the next three to five years. By comparison, some 26% thought asset owners will increase levels of risk.

“Although sterling has not weakened further since October, it remains very weak and it appears to be aiding inflows to U.K. assets,” said Michael Metcalfe, head of global macro strategy at State Street Global Markets, in a news release.

James Binny, Europe, Middle East and Africa head of currency at State Street Global Advisors, added: “The weakness of sterling since the vote benefited U.K.-based clients who were not hedged.”

“However, we have seen increased hedges from existing currency overlay clients — both into passive and more dynamic approaches — as well as more inquiries from clients who haven’t managed currency before,” Mr. Binny said in the news release.