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Confidence in stocks and shares grows

26 October 2009 / by Andy Davies

Confidence in the stockmarket appears to be growing as the number of active investors has risen to its highest level since 2004, according to the Association of Investment Companies (AIC).

New research suggests 52 per cent of active investors plan to increase their investment in the stockmarket compared to 33 per cent last year.

Investors also appear willing to take more risks with their money – as 17 per cent are finding smaller companies the most attractive sector, with this rate more than doubling from eight per cent since February this year.

However, while stockmarket confidence seems to be growing, nine per cent of active investors said they had decreased their stock exposure – although 27 per cent of these investors said they had made a profit.

Active investors continue to favour the UK according to the AIC, with around two thirds of active investors admitting to currently investing predominately in the UK.

Remaining a firm favourite amongst investors is blue chip stocks with one in five active investors choosing this commonly favoured sector.

Meanwhile, confidence in the housing market also appears to be bouncing back from the lows of last year, with 22 per cent of investors believing the housing market will outperform stockmarket compared to an all time low of five per cent last year.

However, the AIC records indicate consumer confidence is still a long way off what it was a few years ago when in March 2005, 46 per cent of the public expected the stockmarket to be outperformed by the housing market.

Commenting on the findings, Annabel Brodie-Smith, communications director at the AIC, said: "Clearly the recent market rally has helped investors put the market turbulence of the last 12 months behind them. It's encouraging to see investor confidence surge amongst both active investors and the general public.

"Certainly those investors who had the courage to invest earlier in the year will have been well rewarded. Risk appetite is also on the up, as tends to be the case during a market rally, and it will be interesting to see if this continues."

© Fair Investment Company Ltd


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