QROPS pensions are able to invest in a wide range of investments, but in order to maximise returns, it is preferable for QROPS investments to be made into equities, as these have traditionally been the strongest perfomaing asset classes over history. However, recent volatility has made many investors wary of making QROPS investments of their funds into equitites.
This week saw a welcome return to confidence levels in worldwide stockmarkets, with most stockmarket indices recording their biggest rises for 18 months.
These rises were due in large part to the Eurozone leaders announcing fresh bailout proposals with regard to the Spanish economy and banks, which appear to have been well received, and to have restored confidence that Spain will not default on its debts.
Underlying the malaise that has afflicted Europe is the fact that coprorate earnings have generally held up very well, with relatively few companies, outside of the banking and retail sectors, having declared poor earnings results, let alone having issued profit warnings. As company performance has held up well, this bodes well for dividend yields, as most companies are in a position to be able to at least maintain, if not increase, dividends.
This in turn should provide a solid underpin for overall returns from equities, for example the FTSE 100 in the UK now has a dividend yield of approximately 4%, and this , cobined with capital growth, provides potential for consistent retunrs from equities over coming years.
Therefore our view is that equtities should form part of nearly all QROPS portfolios, in combination with other asset classes such as fixed interest and property.