Coutts Shifts Investment Focus Away from UK Stocks
Coutts, the private bank serving affluent clients, has sparked controversy by significantly reducing its allocation to UK shares in its client funds. This move involves shifting close to £2 billion of client funds out of the London stock market and into overseas ventures.
The decision has raised concerns due to the UK government's ownership of 28% of Coutts's parent bank, NatWest. The Treasury has been actively promoting investment in UK stocks, making Coutts's move potentially awkward.
Coutts justifies its decision by citing the need for a more global approach, offering clients enhanced diversification, greater investment opportunities, and reduced transaction costs. However, this shift represents a substantial £1.96 billion move away from the UK market, potentially exacerbating the outflow trend from UK funds.
This development comes at a time when the UK government is actively seeking to stimulate productive investment in the UK. Proposed changes include alterations to pension scheme rules and the introduction of a "British Isa" offering tax relief for London-listed stocks.
The adjustments made by Coutts are significant, with the managed equity fund reducing its UK allocation from 40% to 3.5%, the balanced fund decreasing from 22% to 1.9%, and the cautious fund dropping from 16% to 1.4%.
Coutts's decision has been met with mixed reactions. Some view it as a necessary step towards a more diversified portfolio, while others see it as a blow to the UK market. The City is concerned about Coutts's diminishing influence in equity markets, with some UK-listed companies opting for listings in other jurisdictions.
Despite the controversy, Coutts emphasizes its ongoing commitment to achieving optimal returns for its clients. However, the bank's shift away from UK stocks raises questions about its future role in the UK market.