21 April 2015

The BlackRock Investment Institute provides a platform for BlackRock's investment teams to exchange ideas, debate investment topics and share expertise, keeping our investment professionals connected and informed. The Institute plays a critical role in harnessing the collective intelligence of our portfolio managers, risk professionals, trading experts and researchers to provide expert insight and thinking to BlackRock’s clients.

Post-election scenarios
The Institute recently turned its attention to the forthcoming UK general election, debating the various post-election scenarios and implications for asset prices. Ruling Britannia captures the output of that debate, as well as the views of my colleague, Tony Stenning. You may have seen that opinions expressed in the paper have been the focus of a number of news articles in the UK press.

Calm before the storm?
What really strikes me about the analysis – and a point which some journalists have picked up on – is that the Institute believes a ‘soothing outcome for markets is hard to imagine’. Yet, as the paper also highlights, ‘UK markets have been relatively calm’. Such calm could suggest complacency, and that some UK investors may be unprepared for a rapidly-approaching bout of volatility.

While a short, sharp shock of volatility may have only short-term implications for UK assets, the impact on investor attitudes and behaviour could be more profound. Our Investor Pulse survey reveals that 60% of advised investors remain cautious about dipping their toes into the market. How would a high-profile (albeit fleeting) period of rapid market moves affect your clients’ risk appetite? We also know from Investor Pulse that even advised clients tend to put short-term concerns ahead of long-term planning. 1

It’s a question of timing
The new pension freedoms certainly provide people in the UK with more choice. But for those approaching retirement age this year, volatile markets could increase nervousness around investing. We may see more savers choosing to cash in their pension funds, despite the tax implications and the possibility that their withdrawal from the markets could follow a possible post-election slump in asset valuations. Given such circumstances, I believe that we in the asset management industry have a responsibility now more than ever to provide our clients in the UK with the products that have the potential to ride out volatility and generate an income in retirement. BlackRock will remain focused on doing exactly that – whatever the result of the election.

1 BlackRock Investor Pulse.  The survey was conducted globally in August and September 2014 by Cicero Group, an independent research group.  319 UK advised end investors were surveyed.
This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or financial product or to adopt any investment strategy. The opinions expressed are as of 21/04/15 and may change as subsequent conditions vary.


Our Investor Pulse survey reveals that 60% of advised investors remain cautious about dipping their toes into the market.