Half of active investors to increase equity exposure

Some 50% of active investors plan to increase their exposure to the stockmarket in the next few months, according to research carried out in February on behalf of the Association of Investment Companies (AIC), with 62% of those saying that recent stockmarket falls had created a buying opportunity.

Just 11% of active investors will decrease equity exposure, while 36% said their exposure would remain the same. Stockmarket turbulence gave 26% of the active investors surveyed a negative view on equity investment.

Of the general public, 67% said they had never been interested in investing in the stockmarket.

On this year’s ISA allowance, 66% of active investors will use their allowance, down from 74% last year, and 44% of those will include shares in the wrapper.

Active investors favour shares in defensive sectors such as blue chip companies (25%, resources and commodities (15%) and utilities (13%). They prefer the stockmarket to the housing market, with 54% believing the stockmarket would outperform housing over the next year. However, 33% think both will do badly.

Concerns about low interest rates on savings accounts are propelling some investors back into equities, with 25% saying they considered low rates the greatest financial threat.

Despite gloomy prognoses of Britain’s economic future from bodies such as the International Monetary Fund (IMF), 67% of active investors prefer Britain for their equity investment.

Annabel Brodie-Smith, the AIC’s communications director, said, “Turbulent markets and the credit crunch have polarised investors. There’s been a wave of confidence in half of active investors who are poised to re-enter the stockmarket, but over a quarter of active investors are presently disillusioned with stockmarket investment.”

It appeared the savings ratio was set to rise, with 40% of active investors and 34% of the general public saying they were saving more and spending less.

The research into the opinions of the general public was carried out online by Opinium Research LLP between 17 and 19 February 2009 among 2,050 British adults, while the private investor research was carried out by Hemscott among 1,311 private high net worth investors throughout February. Past research was carried out by Opinium, Hemscott and YouGov using a mixture of methods.