Investors head for Cash amid Eurozone fears

Posted on November 24th, 2011 | Categories - News

Investors head for Cash amid Eurozone fearsNew figures show that investors are favouring Cash and other more secure investments as concern continues to mount of the debt crisis in the Eurozone and fears of another recession.

Fidelity Fundsnetwork, the online investment platform, revealed that last month the UK Money Market sector saw the largest inflow of all their investment sectors, with their own Cash fund being the most popular amongst investors.

In a clear sign that investors are increasingly nervous about the risk and volatility caused by the Eurozone crisis and generally pessimistic economic outlook, the second most popular sector was the Cautions Managed Sector.

Interestingly of the £26 million which was invested in the Cautious Managed Sector, all but £1 million was placed there by Financial Advisers on behalf of their clients. This might indicate that Financial Advisers are more concerned about current events that direct investors.

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Poor performance

Experts warn though that whilst interest rates remain low the performance of Money Market or Cash Funds will be poor.

The Fidelity Cash Fund has produced a return of only 0.3% over the past year, significantly below the rate of inflation and lower than the best savings interest rates available from traditional bank and building society accounts.

As such Cash or Money Market funds should only be seen as a temporary home until confidence in the markets returns.

Caution

Investment Director at Fidelity, Tom Stevenson, said: “There hasn’t been much change in the best selling funds in the last two or three months. The theme is caution, a lot of fixed income and cash funds as people withdraw from riskier assets to more defensive ones.”

He continued: “There is obviously some residual nervousness about the emerging markets sector. Though a few people are seeing buying opportunities in the cheaper prices. This is a small group, who continue to back the idea of a two-speed world, but they are outnumbered by the cautious.”

Also in the top 10 best selling funds were Fidelity MoneyBuilder Income, Invesco Perpetual High Income, Jupiter Merlin Income and M&G Optimal Income.

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