Investors dump cash and property for overseas equities

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Investor confidence continues to gather pace as investors move away from the perceived safe havens of cash and property, favouring overseas equities instead.

The big winner in the final three months of 2012 was European equity funds which saw sales increase by 20% as investors looked to benefit from depressed prices as a result of the euro crisis.

Emerging market equity funds also saw a strong increase in sales, up 10%, as well as managed multi-asset funds, up 9%, according to data from Skandia, part of the Old Mutual Wealth.

Meanwhile, sales of cash funds plummeted 25% between September and December compared to the previous quarter, accounting for just 4.5% of sales, the lowest volume since 2011.

UK Equity and Global Specialist funds did not see any significant shift in volume but remain the best-selling equity funds with 16% and 11% of sales respectively.

Investors continued to seek balance in their portfolios through fixed interest investment with the UK fixed interest sector retaining the top spot again in 2012, accounting for nearly a quarter of all sales on the platform at the end of Q4 2012. International fixed interest funds also proved popular in Q4, with sales up 9% on Q3.

In terms of individual funds, equity income dominated the top ten with 5 funds, including the M&G Optimal Income fund in first place in Q4 2012. Two of Skandia's Spectrum risk rated funds also made it into the top ten, showing that many investors are focused on controlling risk as well as generating returns.

Graham Bentley, head of investment marketing at Skandia commented:

"2012 was a turbulent year for investors with the eurozone debt crisis and the US fiscal cliff looming over the markets. Understandably, investors continued to be nervous over the first half of the year and many investors chose to keep their investments in asset classes likely to experience below average volatility.

"However towards the tail end of 2012, investors started to see signs of recovery as the ECB took action, the FTSE rallied and the US economy started to shows signs of a turnaround. As a result customers started dipping their toes back into previously unloved sectors and moving away from cash and money market funds.

"Regardless of what 2013 holds for the markets, it's important for investors to continue speaking to their financial adviser to ensure they maintain a well-diversified portfolio that matches their risk profile, rather than chase returns based on short term swings in market performance. After all, staying invested provides a real potential to grow the value of a portfolio over the longer term, whereas timing the markets is close to impossible."

 

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