Investors move from shares to cash

Posted on October 9th, 2011 | Categories - News

Investors move from shares to cashAs stock market volatility continues investors have moved to cash in an effort to avoid tumbling share prices.

The latest investment trends report from Skandia has shown that investors are seeking the relative security of cash and money market funds rather than expose their capital to potential further falls on the stock market.

Skandia offer an investment platform which allows investors to hold their pension and ISA (Individual Savings Accounts) investments in one place, they also actively monitor where investors are placing their money.

The news comes after a torrid few months for investors. The summer saw records amount of money withdrawn and new investments were down by 90% in the two months to the end of July.

Skandia has seen an increase of 121% in investments made into the Cash funds on its platform, the increase made the sector the third most popular over the past quarter.

In contrast investments into UK Equity funds dropped by 10% compared to the last quarter, indeed all equity sectors, except Japan, saw less invested than in the previous quarter.

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Graham Bentley of Skandia’s, said: “Investment into cash and money market funds had been declining steadily since the last period of extreme market volatility in 2008 but has now shot up to its highest level since the first quarter of 2009. This is understandable, nevertheless cash still only accounts for approximately 13% of sales, indicating that the majority of investors are using the platform to invest in a well-balanced portfolio for the long term.”

Bargains

Despite the ongoing stock market volatility Mr Bentley believe that those investors who buy now could well pick up bargains and benefit in the long term from buying when share s prices are depressed.

He continued “In particular, investors should consider dividend income, which on many equities is very attractive at current valuations, especially as any increase in interest rates seems some way off – on the contrary the next move in interest rates is more likely to be down to 0.25%”.

Other experts have warned that share prices may still have a way to fall, and to expect significant volatility for many months to come