View more on these topics

Govt cash trashing forcing investors into riskier assets, says Hargreaves Lansdown

The Government’s recent intervention is trashing cash and pushing investors who are seeking greater income into riskier assets, says Hargreaves Lansdown head of research Mark Dampier.

Speaking at a Hargreaves Lansdown press briefing this morning, Dampier said the firm had noted a three-fold increase in investors shifting out of cash Isas as their earnings diminish.

He said: “Some of it is going into equity Isas, a lot into corporate bonds and some into equity income funds. What do you do? You have a lump of money to use, you can either spend your capital, which some people do or you take some of the investable cash and put it in a more risky investment.”

“Investors are moving into the market and its an increasing flow as cash effectively gets trashed. They’re being forced out of cash into other assets. Maybe the Government wants them buying gilts, corporate bonds and other investments to get consumer demand.”

Dampier did not believe the corporate bond bubble currently presents an investment bubble but noted the significant flow into the asset class.

He said: “ I do see an awful lot of money going in there. That might suggest a kind of a bubble but its far too soon to suggest that. I’ve got to see clients going completely and utterly mad and I’ve not seen that.”

He said the Government had “overdone it” in terms of intervention and was not confident it would be able to successfully reverse the quantitative easing process it had implemented in time.

He also said the scale of the policies enforced had been largely political in motive and questioned the efficacy of their strategy.

He said: “They’re running out of time, they’ve got an election and they’re trying everything now to get some meaningful green shoots through before May 2010. Maybe they will, but it takes a lot longer. I think some of the initiatives will make it worse and actually prolong the recession in the end.”


Alliance Trust doubles Oeic range

Alliance Trust Asset Management, a subsidiary of the 120-year old Alliance Trust investment trust, has doubled its Oeic fund range with the launch of UK equity income and North American equities funds.

Match of the day

Considering more than half of net inflows into funds are headed into fixed-interest sectors at the moment, investors should be aware that the nature of bond funds is undergoing a change and may need to adjust their expectations and approaches.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm