IMA report shows investors resilient to market falls

Investor confidence has remained resilient in the face of the credit crunch, according to a survey on attitudes of more than 3,000 retail investors by the Investment Management Association (IMA).

The IMA’s investor confidence index fell between May and November last year, but it said the move was relatively modest given the market meltdown in October.

The index, which rates sentiment between 0 and 200, with 100 being neutral, fell from 78 to 71.

‘This is not surprising,’ said IMA chief executive Richard Saunders. ‘What does surprise me is the resilience of investors given the severity of events in the market between May and November. A significant number clearly see opportunities, particularly for the longer term.’

The separate investor intentions index, which measures the likelihood to withdraw from existing funds or make new investments, is also slightly down at 89, on a scale between 0 and 200, compared to 98 in May.

This suggests investors are slightly more likely to withdraw their investments than make new ones, but appetite to realise losses is not strong.

Confidence in advisers has also declined in the wake of the turbulent market conditions. The survey also highlights a ‘use by date’ for IFAs, with investors who have not used an adviser for two-years unlikely to do so again.

The IMA analysed the views of 3,000 investors, split into three groups – 2,000 retail investors, 500 investors who had purchased an investment product in the past 12 months and 500 who planned to do so in the next year.

The survey’s analysis of attitudes to asset classes revealed a sharp drop in confidence in money markets, falling from -8% to -42%. Confidence in bonds rose from -1% to 18%.

Some optimism remains, with 38% of investors seeing current conditions as creating opportunities for investment. But three out of five investors believe the economic slowdown will last for another 12 to 24 months.