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More money to flow into stocks as confidence rises

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15/05/2013
Confidence among UK savers is growing with a third planning to increase the amount they invest in the next 12 months, a survey has revealed.

The Schroder Global Investment Trends Report – which polled 1,008 UK investors – found that two-fifths are more confident about investment opportunities in 2013, with more than half saying they think equities offer the greatest growth potential.

This is compared with just 16% of investors who are looking to invest in fixed income assets in the next 12 months.

The report also highlights a disconnect between the assets investors believe will deliver the greatest growth and where they are actually planning to invest, leaving them potentially backing low-risk assets at a time of high-growth elsewhere.

While 57% see Asia Pacific as the engine for investment growth, only 15% said they will actually invest their own money in this region.

Meanwhile, more than half of UK investors said they are looking to achieve long-term capital growth and income generation from their investments but those polled said they intend to place half of their new and re-invested funds in 2013 into low-risk, low-return assets, with just 12% of funds allocated to higher-risk, higher-return investments.

The greatest investment concern for UK investors was the on-going eurozone debt crisis, cited by more than two-thirds (67%) as something that worries them as they look to their investment strategy for the next 12 months. More than a half (51%) cited a weak economic recovery and continuing current low levels of interest rates (47%) as significant concerns.

Robin Stoakley, head of UK intermediary at Schroders said: “UK investors recognise investment opportunities are good – stock markets globally are showing strong growth and the FTSE has recovered the losses it suffered in 2008, growing 11% already this year.

“As a result the trend to switch into equities and out of bonds is set to continue this year but UK investors risk missing other growth opportunities by keeping large sums of money in cash-based savings, particularly given that interest rates remain at record lows and show no signs of rising anytime soon.

“Equally while investors understand they need to gain exposure to global, particularly emerging markets assets if they are to maximise growth potential, many remain cautious when it comes to committing their own money to these assets. This paints a mixed picture for UK investors. On the one hand they are seeing growth opportunities in UK, emerging markets and Asia but on the other they remain over-weight in cash and are potentially failing to capitalise on improving economic conditions.”

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