According to research from Capita Registrars, this represents the fifth consecutive period where private investors were net equity buyers, with £3.5bn added since mid-May 2010, the longest sustained period of net buying since the research started six years ago.
The most recent three-month timeframe is also the largest net purchasing period since spring 2009 and the first June-to-August to be in positive territory since 2006.
Overall, retail shareholdings dropped to £217bn at the end of August, a fall of £320bn by the end of May, thanks to the equity market’s rapid peaks and troughs. For example, on 22 September, private shareholdings fell to £203.1bn as in a single day the market closed 4.7% down – or £10bn down in individual investor’s language.
According to Charles Cryer, chief executive at Capita Registrars, private investors are “exceptionally brave” to be buying now.
“They’re obviously on the lookout for a bargain, although the economic outlook is uncertain and risks to markets abound,” he said.
“Most importantly, though, they are looking everywhere to find an inflation-proof income,” he added. “Despite the turmoil, dividends have been growing strongly this year, and the market is now yielding 3.8%, twice as much as government bonds, yet also with the potential prospect of income growth as companies are cash-rich and have begun to return that cash to shareholders. The longevity of the buying spree reflects that ever more desperate search for yield.”