Jason Hollands of Tilney Bestinvest suspects that “behind the cheery IA headline” lies a “more nuanced picture of fragile sentiment,” particularly when it comes to equity markets.
“The data clearly suggests that retail investors were wary about the resilience of stock markets over the summer,” Hollands said.
“After an almost myopic focus on Brexit, there are of course a cocktail of other concerns out there: the US presidential election, worries about the health of the European banking sector which have shifted from the periphery to Germany’s banks and a sense that central banks are operating at the limits of what can be achieved by monetary policy alone.
“With share price valuations looking quite rich across most developed markets, caution by investors is understandable but with bond yields at very low levels, indeed negative in some cases, traditionally defensive asset classes are also unappealing and may not prove quite the safe haven many assume,” he argued.
“The gush of liquidity provided by central banks in recent years has led to a very high degree of correlation in equities and bonds and this could in turn also lead to a synchronised sell-off at some future point.”
