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Half can&#39t tell bonds from equities

Half of investors do not know the difference between equities and bonds and among the public at large, this figure rises to two out of three, according to research for Invesco Perpetual.

The company says this is particularly worrying as corporate bond funds are among the biggest sellers this Isa season, accounting for 22 per cent of gross retail sales.

Invesco says this raises the issue of whether investors know what they are buying.

The research found that investment knowledge improves with age as 84 per cent of 18-24-year-olds do not know the difference between equities and bonds but 42 per cent of people aged 55 to 64 do know.

The research also shows that 75 per cent of investors do not know what asset allocation means.

The research was conducted by NOP Research Group between February 28 and March 2. It questioned 959 adults aged over 18.

Chief executive Mike Webb says: “It is extremely worrying to think that one in two investors do not know the difference between bonds and equities. Given that there are 7.8 million Isa accounts in the UK, that means a lot of people are investing without really understanding what they are investing in.

“Corporate bonds are some of the most popular selling funds this Isa season but our research does beg the question, do people really know what they are buying?”

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