Onshore bonds: The next big thing?

Onshore bonds could be set for spell in the limelight if new research from HSBC Life is correct, with the company's latest Adviser Study revealing that almost 30 per cent of financial advisers are expecting to see an increase in sales over the next year. 

With interest rates at levels, growth will be driven by a focus on longer-term solutions, says HSBC Life, as investors readjust their portfolios in light of the ongoing coronavirus pandemic.

“Onshore bond demand is driven mainly by the three I’s of investment, income and inheritance which are core considerations for advisers and their clients in the financial planning process," says Mark Lambert, Head of Onshore Bond Distribution at HSBC Life (UK) Limited. "Our study has shown that many advisers would agree with this."

Quilter International meanwhile, sees potential in offshore bonds with the addition of an International Wealth Bond in both life and redemption versions to its Ireland-based European Wealth Bond offering. The company says the new bonds strengthen its high net-worth proposition and offer more choice to clients and advisers over the jurisdiction in which they want to place their wealth. 

UK savers in general had a global outlook in October according to the latest figures from the Investment Association (IA), which reveal Global (equity) and Global Bonds as the best-selling sectors over the month. Overall net retail sales reached GBP2.5 billion in October, with Mixed Asset funds becoming the best-selling asset class for the first time since February 2020, recording net sales of GBP1.2 billion in October.

News of Pfizer's vaccine breakthrough meanwhile, clearly struck a chord with retail investors, with investment platform eToro reporting a huge 905 per cent increase in open positions on the American pharmaceutical company's stock in November. Pfizer’s vaccine news actually prompted a 4.7 per cent increase in the FTSE 100 on the day of the announcement, the biggest one-day gain since March.

From ups to downs next and a new study from Quilter which suggests that over 40 per cent of cash ISA holders don't know the interest rate paid on their account. With the average rate paid  below the rate of inflation meaning, millions of UK savers are actually losing money in real terms.

"We estimate that over GBP100 billion is held in cash ISAs where the holder doesn’t know the rate of return," says Rosie Hooper, chartered financial planner at Quilter Private Client Advisers. "Many people will be losing money in real terms, because their bank pays less than the rate of inflation."

In another study out this week, Quilter reveals that only 4 per cent of savers took advantage of the fall in markets brought on by the coronavirus pandemic by increasing their stock market investment, despite a quarter of people saying they had more money to invest than they would do in a normal year following the first lockdown.

“Stock market returns over the last five years will have comfortably beaten anything a savings account could have achieved and that is with the Covid-19 crisis thrown in for good measure," says David Gibb, chartered financial planner at Quilter.

And finally, a word of warning for Generation X with new research from the International Longevity Centre UK (ILC), supported by Phoenix Group, revealing that at least one in three of those born between 1965 and 1980 are set to reach retirement age with minimal income.

"One in five of the UK population are Gen Xers and millions will face problems because of inadequate retirement savings if actions aren’t taken to help them understand their current position and the options available to them," says the Phoenix Group's Jenny Holt. “This is the generation that entered the job market too late to benefit from final salary pensions, yet too early to benefit from schemes such as auto-enrolment."

Don't forget, voting is now open for the ETF Express European awards, which are in their 11^th year, and now in the august company of Bloomberg, who supplied the data on the short-listed ETF issuers. Cast your vote here.

Wealth Adviser
 

Copyright © 2020 All Rights Reservered

About | Disclaimer

Unsubscribe me from the list