Investors are shunning US equities as turmoil within President Trump’s administration continues, with sentiment towards the asset class dropping from 0.85 per cent to -2.54 per cent in the month to August.
US equities fared almost as badly year on year, with the second biggest drop in sentiment of 13.06 percentage points, the Lloyds Private Bank Investor Sentiment Index finds.
Overall investor sentiment picked up in August, rising from 2.59 per cent to 4.92 per cent over the month. Although sentiment remained subdued compared to pre-election levels, it was 1.53 per cent higher than a year ago.
UK government bonds saw a surge in sentiment with levels up from -9.77 per cent to -2.28 per cent while investors were most bullish on gold with sentiment reaching 40.94 per cent.
Sentiment towards emerging market equities hit 21.05 per cent, up 5.1 percentage points on July. This was in keeping with the performance of emerging market equities, which saw the third best performance after commodities and eurozone equities, up 3.3 per cent month-on-month.
Unsurprisingly in the low interest environment, the lowest sentiment was towards cash at -30.39 per cent.
Markus Stadlmann, CIO at Lloyds Private Banking, says: “UK government bonds saw the biggest improvement this month showing investors are becoming less pessimistic towards gilts and the outlook for the UK.
“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 emerging market 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.”