Investors ditched cash and fixed interest, says Skandia

Investors ditched cash and British fixed interest investments throughout 2010 in favour of overseas equities, according to Skandia’s latest investment trends study.

Global specialist and emerging markets funds were particularly popular on Skandia’s retail investment platform, the largest in Britain.

Global specialist funds increased their share of sales by 31%, ending the year with 13% of sales. Emerging market equity funds saw 30% growth, resulting in a 6% share of sales in the final quarter of the year.

Overall, overseas equities grew by 22%, accounting for 34% of sales by the end of the year.

Sales of cash funds and British fixed income, on the other hand, have lost momentum. Cash funds lost 13% of their sales and represented just 7% of sales in the final quarter of the year. (article continues below)

Skandia says the drop in sales of cash funds is even more pronounced over two years, having fallen by 60% since their peak at the end of 2008, when they accounted for 16% of sales.

Sales of British fixed interest funds dipped 15% last year. Yet with 20% of sales it remained the biggest selling investment sector.

Graham Bentley, the head of investment marketing at Skandia, observes inflation is still a concern in Britain.

If inflation headlines remain high, investors will increasingly turn to equities to ensure their portfolios are able to deliver a return in real terms.