Investment confidence dwindles Go compare with our comparison table

Investment confidence dwindles

11 January 2010 / by Andy Davies

Investors are not as confident as they were in the summer, the Investment Management Association (IMA) has said, with fewer investors having a positive outlook for 2010.

While investors do appear more confident about market prospects than they did in 2008, they held a more positive view before the summer last year.

According to the latest findings by the IMA, the number of people planning to invest has almost halved since May 2009. At this time 30 per cent of investors said they had plans to invest, but this figure now stands at 17 per cent.

The IMA's Investor Confidence Index has revealed that investors are less bullish about their outlook for investment returns than they were in May. The index now stands at 99 points – a fall of seven points since May, although it is still 28 points ahead of its position a year ago.

A lack of disposable funds appears to be the main reason given for not investing, with 59 per cent of people saying this was the case, while 30 per cent said any spare cash they have will go into savings rather than investments.

Meanwhile, the number of investors who are likely to withdraw funds from their investment has also increased – rising from 21 per cent in May to 31 per cent today.

Commenting, Richard Saunders, chief executive of the IMA said: "The strength of the rally in the stock market since the March low and its recent pause for breath as well as uncertainty about the prospects for the economy, have served to dampen expectations of further strong investment returns. As a result, investors are looking more cautious about the coming six months."

IMA's research into risk appetite amongst investors reflects this. For instance, the number of investors prepared to accept no risk in their investments has risen from 19 per cent in May to 28 per cent in November.

Despite investors showing caution towards the UK market, the outlook for global markets has improved steadily over the past year. Commodities and commercial property in particular have increased in popularity, while the Far East is considered the most attractive market, with the UK the least attractive.

Explaining these findings, Mr Saunders added: "Most people have the majority of their cash and investments here in the UK, so their view on the prospects for the UK economy and equities in the UK will have a much larger effect on their overall confidence and appetite for risk than developments overseas.

"The negative perception of the UK compared with other markets helps explain why confidence and risk appetite are down, while optimism on most markets and asset classes has actually improved."

© Fair Investment Company Ltd

 

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