Money News
Research from the Association of Investment Companies (AIC) indicates that despite recent stock market turmoil, active investors are holding their nerve - but only just.
The AIC's latest investor confidence index found that 38% of active investors say a stockmarket crash poses the single biggest threat to their finances. Whilst this is only a slight change since February (36%), this remains the most commonly cited worry. Meanwhile, fewer active investors plan to increase their investments in the next few months, and are much more inclined to sit tight.
In stark contrast, the biggest causes for concern for the general public's finances were focused closer to home. People's fears increasingly centred on losing their job (26% compared to 17% six months ago) and further interest rate rises (24% compared to 14%).
Fewer active investors plan to increase their investments in the next few months - down from 43% in February to just a third (33%) now. On the other hand, the number of active investors planning to keep their stock market investments the same has increased by 10% in the past six months, with more than a third (34%) saying that this is because the stock market is simply too uncertain at the moment.
Of the 16% that said they planned to decrease their investments this was because the economy looks fragile (35%), and the stock market is still too uncertain (31%). However, of the active investors planning on increasing their investments, 32% said this was because they had more money available to do so. A quarter (24%) said it was because they were feeling more optimistic about the outlook for the stock market.
The general public is much more cautious at the moment with just 12% of those that have investments planning to increase their holdings. The vast majority - 77% - won't not be making any changes just yet - again, the main reason being the uncertain outlook of the stock market based on the options given.
Active investors may be more cautious, but they've fallen back in love with Resources (including oil). Resources is the sector most commonly cited by active investors as the most attractive sector at present (23%) and has now surpassed blue chips (19%). This is the first time since February 2006 that Resources was widely tipped as the most attractive sector (21%). The UK remains the geographical area of choice for nearly three quarters of active investors (71%).
The research also shows that the UK's love affair with property is rapidly ending, with confidence in returns from bricks and mortar falling yet again. Indeed, just 7% of active investors backed the housing market in September, down from 12% in February.
Only a quarter (27%) of the general public think property alone (out of the stock and property markets) is the best bet now, compared to 31% in February.
05 November 2007 © Moneyextra.com
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