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Advisers’ flight to safety

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Virgin Money’s Investor Intentions Index has revealed a short-term flight to safety as IFAs advise clients to move into cash and bonds rather than the stock market.  

Cash and bonds were the top two sectors chosen by advisers for the next three months, rather than emerging markets and UK shares – the top choices in Virgin Money’s first index.

The quarterly index tracks the confidence of IFAs across the country in 10 different investment sectors, as well as where they advised clients to invest their money during the previous quarter. The latest survey reveals short-term confidence in equity investments has been shaken in recent months.

Approximately 86% of IFAs said they would advise clients to invest in cash over the next three months, with 83% plumping for bonds, this compares to 78% and 75% respectively in the previous three months. UK shares were still investment of choice for 78% of IFAs looking to the next three months, compared to 74% who advised clients to pick this type of investment in the previous three months.

Property and commodities fared worst of all sectors in terms of IFAs’ confidence for the future. Only 41% of IFAs are choosing property for the next three months, with 40% picking commodities. Previously, 50% chose property and 52% went for commodities.

Scott Mowbray, spokesman for Virgin Money, said: “The shift to cash and bonds is a sign of the times with stock market volatility and almost daily doses of bad news hitting confidence in shares. It is clearly a case of safety first for advisers with clients’ best interests at heart.

“Concerns about inflation are the dominant factor in the market with that worry outweighing fears about the UK economic slowdown tipping over into recession.

“Despite the short-term angst our research shows IFAs remain optimistic about the long-term outlook for UK and emerging market shares. The real damage has been done to property and commodities while other sectors such as green investments are holding up well.”

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