Investors shun UK in favour of foreign firms big and small

Three-quarters of investors expect the best returns over the next year to come from companies based outside the UK, according to F&C Investments' latest Question of the Month survey.

The survey, which questions visitors to F&C's investment trust website fandc.co.uk, further found that 60% of respondents backed large companies to deliver superior returns to smaller companies.

In all, 47.1% felt the best prospects were in larger companies outside the UK, 28.2% in smaller companies outside the UK, 12.9% in smaller companies in the UK and 11.8% in larger companies in the UK.

Smaller companies tend to do better in recovery phases, so the big percentage backing larger stocks suggests respondents are less than convinced about the strength of the global economy at present.

However, smaller companies performed strongly after the stockmarket bottomed in March 2009, so investors may feel the early cyclical phase is behind us and that larger stocks may now take the lead. One participant who left a comment said: "I predict the problems of companies like BP will seem a distant past."

F&C's investment trust range offers exposure to companies great and small in many overseas markets, with smaller company trusts focusing on Europe (European Assets Trust) and the US (F&C US Smaller Companies) as well as F&C Global Smaller Companies, which includes a UK element. The managers of these three investment trusts recently took part in a video roundtable discussing prospects for the areas they invest in, which can also be found at fandc.co.uk.

Mike Woodward, head of investment trusts at F&C, commented on the survey results: "For some years now UK-based investors have become increasingly international in their outlook. It will be interesting to see over the coming year whether our survey respondents' predictions come true."