investor confident at long time high

UK investor confidence has reached an eight-year high as low interest rates stoke appetite for stock market exposure, the latest research from Morningstar reveals.

investor confident at long time high


More than half (55%) of investors are looking to increase their stock market exposure, up from 45% in 2012, and 23% state that they are feeling more optimistic about the outlook for the stock market. Of the 55%, one quarter are motivated by the low levels of interest on UK savings accounts.

However, the research also showed further decline in interest in UK-focused investments, with just 15% favouring the region, making it the third most attractive investment region for investors. This compares to 20% in 2012, and 75% in 2007.

Conversely, emerging market appetite has increased to become the most favoured region, with 23% of investors citing opportunities here as being the most attractive.

This is a five percentage point increase from last year, when it was the second most popular region and chosen by 18% of investors. In 2007, just 6% of investors favoured emerging market investments. Asia Pacific was the second most popular region for investors surveyed, attracting 19% of the vote.

Size matters

There has been a surge in appetite for the smaller company investments, and these are now considered to be the most compelling investment opportunity in the current market.

More than one quarter (28%) of investors cited these companies as the most attractive, up from 12% in 2012. Enthusiasm for blue chip companies has fallen, although they are still the second most attractive investment type and were cited as such by 15% of investors. This is a 7% decline on the 22% in 2012.

Investor concerns

The eurozone crisis remains the top risk for investor finances in the minds of investors, although the percentage of investors citing this has fallen from 37% in 2012 to 20% in 2013. A stock market crash, and unravelling US economy and poor returns on cash deposits were highlighted as concerns by 18%, 10% and 10% respectively.

Annabel Brodie-Smith, communications director at the Association of Investment Companies (AIC) said on the research: “The stock market rally has raised investor confidence to pre-credit crunch levels. Risk is on with investors favouring emerging markets over the UK and smaller companies over blue chips. The stock market strength, combined with poor rates of interest on savings accounts, has created a ‘carrot and stick’ effect meaning investors looking for any kind of yield have few places to turn other than the stock market."





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