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Neutral grounds

Last month, we released the initial findings of our third GB Investor Report based on an online survey of over 4,000 retail investors. This shows that, in May 2009, the IMA Investor Confidence index turned slightly positive, with the index indicating that investors on the whole are still neutral about putting money into new investments or increasing existing investments.

This is borne out by IMA sales statistics which demonstrate that investors are cautious about re-entering the market and when they do are putting modest amounts of money into equity funds but have been putting much healthier amounts – over £1bn per month – into corporate bond funds over the last six months.

When asked to rate asset classes on a scale of one to 10, although equities bounced back into positive territory, they are still viewed less favourably than bonds.

However, 49 per cent of investors express the view that now is a good time to invest, with 43 per cent saying that if you see an opportunity, you should take the risk.

Investors are also less likely to think that they should be putting money into risk-averse products (23 per cent) compared with a year ago (39 per cent).

IFAs are still the third most popular source of information, after financial websites and publications, with one-third or more of all age groups, except the 18-34 age group, using them.

Satisfaction ratings with IFA services remain strong despite a slight drop over the last year. Compared with May 2008, IFAs are less well rated for their ability on tax-efficiency – 80 per cent compared with 87 per cent – and product advice – 72 per cent compared with 82 per cent. Financial websites remain the most popular source of information and have steadily increased in popularity over the last year, being used by 54 per cent of investors compared with 47 per cent.

Investors generally feel that the market is going to hold its course for the next six months but, in terms of the FTSE 100 recovering to the 6,000 level, 53 per feel it will take over two years. Ten per cent are more upbeat, expecting it to take between 12 and 18 months.

In terms of how long the economic slowdown might last, 47 per cent predict between one and two years but 18 per cent think it will last over three years.

If investor conf-idence continues on a positive trend, it is possible that investors will begin to return to the markets gradually. The IMA’s sales statistics indicate that this is already happening, with net retail sales in June 2009 at their third-highest level ever.

Mona Patel is head of communications at the Investment Management Association

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