UK equity is top destination for bonuses

The Rplan study, conducted in January 2015 across 1,108 people, found that 27% of those surveyed that plan to deposit their Q1 bonus package in an investment fund ISA will select one geared towards UK equities.

Another domestic sector poised to benefit is UK bonds, highlighted by 12% of investors, 6% are leaning towards European equities, while 51% were undecided as to what sector they will invest in.

Bonuses totalling £23.28bn will have been paid out by the end of the quarter to 28% of UK adults, averaging out to £1,663 per head.

The report stated that more than 45,000 people are set to receive in excess of £50,000 each, part of a total of 137,000 that will collect more than £10,000.

Of the 1,108 people that took part, 29% – or 321 – received a December 2014 bonus or expect one in this quarter, with 66% of these intending to invest or save a portion of it. Of the 321 people, 55% said they would put some of their bonus into an investment ISA, including 14% that would invest all of it.

“Investors everywhere have a bias towards domestic investments, usually because they feel it is what they know,” said Stuart Dyer, CIO of Rplan.

“Unfortunately, it is not a great idea for any investors to be significantly overweight to any particular sector. Our research last year found that nearly half of UK retail investors had over half of their portfolios in UK equities and bonds, and that is alarming. It is imperative that they have a balanced portfolio to reduce volatility and risk.”