Market correction hits UK private investors with £12bn loss

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Private investors have continued to ride the UK bull market over the course of 2013 so far but their failure to spot the recent market correction cost them close to £12bn, new data suggests.

Capita Registrars’ Private Investor Watch shows private investors added a net £2.3bn to their UK equity holdings over the six months to the end of May, taking their total value to £222.2bn – or the equivalent to 11 per cent of UK stocks by value.

However, the report also notes that private investors failed to lock-in profits during the strong run-up in prices and continued to buy at the end of March, when the suggestion that the US Federal Reserve could start to taper quantitative easing prompted a sell-off in global markets.

Private investors’ equity holdings declined in value from the £222.2bn at the end of May to £210.7bn by the end of June as the sell-off showed little sign of abating.

Between December and May, investors showed a preference for cyclical shares. This preference has been seen for almost 2.5 years now, reversing a previous two-year focus on defensive names.

Capita Registrars chief executive Justin Cooper says: “Private investors have enjoyed a very good 12 months in the stock market, scooping capital gains and healthy dividend payments. They have traded shrewdly over the last few years, and have often timed the market well.

“But this year they failed to observe the old market cliché warning them to ‘sell in May and go away’. It’s cost them dearly in recent weeks. Investors have had a stark reminder that equities are not a one-way bet.

“With growing gloom over global growth, despite better news in the UK, and the likelihood of a winding down of monetary support, the outlook for asset prices is highly uncertain.”