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Most private investors want income more than growth

20 June 2024

Wealth managers and financial advisers expect the UK’s economy and stock market to improve and anticipate rate cuts at some point this year.

By Emma Wallis,

News editor, Trustnet

Most private investors and high-net-worth individuals prioritise income when investing, according to a survey by Rathbones. Wealth managers, financial advisers and financial planners contacted by Rathbones in May 2024 said 88% of their clients are investing for income rather than growth, partly due to the recent cost-of-living crisis.

Advisers and wealth managers highlighted the UK as a key market for equity income. Most professional investors (79%) expect significant dividend growth during the next 12 months and a further 12% predict modest dividend growth.

Almost 60% of wealth managers and advisers think UK economic growth will rise above expectations and 29% believe it will rise in line with expectations over the next 12 months.

Two-thirds (65%) of respondents believe the Bank of England will cut interest rates this year, providing further stimulus for economic growth. Only one-third (34%) expect the US Federal Reserve to do likewise, although about 40% anticipate US rates cuts in the first quarter of next year.

Alan Dobbie, manager of the Rathbone Income fund, said: “Whilst the relative cheapness of the FTSE All-Share has been apparent for some time, it is only more recently that a plethora of catalysts have fallen into place to unlock this substantial valuation discount.

“Better than expected economic data, renewed merger and acquisition interest, increased share buybacks and imminent interest rate cuts are all likely to play a role in restoring the fortunes of the UK market.

“More importantly, meaningful pension and planning reforms, designed to catapult the UK out of its growth funk, have moved right up the political agenda. If politicians can follow words with action, then investors are absolutely right to be getting excited about the prospects for the UK market.”

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