Investors’ holdings in cash have risen 408 per cent over the past three months, compared to the same period last year, ahead of the Brexit vote, as they shed UK and European fund holdings, according to rplan.
Data from the online platform shows that investors have sought safety in cash as the outcome of the EU referendum looked increasingly uncertain.
Investments on the platform into UK funds have dropped 63 per cent over the past month, versus the same period last year, and have dropped 46 per cent over the past three months.
European funds have not gone unscathed, with the amount invested in the funds down 41 per cent over one month and 22 per cent in the past three months.
The moves are despite an overall 33 per cent increase in new investments on the platform over the past month.
Stuart Dyer, rplan.co.uk’s chief investment officer, says: “UK investors have clearly been cautious the past few months and it is hard to say how much of this is due to a potential Brexit as there are other concerns regarding world markets. But Brexit is clearly front of mind for UK investors as they fly to safety.
“But it is essential that investors take a longer term view with their investments and construct balanced portfolios designed to be held for five years or more. UK and European equities should play a key role in these.”
However, experts predict that once the vote results are announced there will be opportunities for investors to put cash to work, regardless of the result.
Holding cash, to put to work post-vote is a wise move, says Rowan Dartington Signature managing director Guy Stephens.
“So, holding some cash ahead of Friday, ready to be deployed, is probably about the best hedge an investor can make. The vast majority of businesses will not be affected in any meaningful way in the long term. Life will carry on and we won’t ever know what the outcome would have been had we voted the other way.”
Valentijn van Nieuwenhuijzen, head of multi-asset at NN Investment Partners, says a vote to leave could lead to interesting investments.
“It could well occur that after a period of sharp risk aversion – on the back of an already cautious and cash-rich investor community – interesting contrarian investment opportunities start to emerge.
“The notorious mood swings of Mr. Market might well get into extreme territory during the Brexit aftermath and once it starts to become clear that the global economy has actually not sank into a black hole an impressive rebound in risky assets could easily occur during the second half of the year.”