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Current confidence levels amongst UK investors are low as they grapple with the uncertainty of Covid-19 – dropping 38 percentage points during the epidemic. This is according to London-based ad agency AML Group. Working in partnership with The Nursery Research and Planning, it has launched the Investor Index – a barometer of confidence levels amongst UK retail investors and measuring the impact of Covid-19.

Conducted online, 500 people with investments of £10,000 or more from across the UK were surveyed and asked a number of questions to gauge levels of confidence pre and post Covid 19. The sample – representative of a broad demographic – included retired and non-retired respondents. The study also included eight in-depth interviews with financial advisers.

Older investors took the biggest hit under Covid-19

The study has also revealed that older investors (aged 55+) have taken the biggest hit with a 54 percentage point drop in confidence levels post pandemic whilst the younger investors (18-34) (that indicated relatively low levels of confidence pre-Covid19) have remained relatively optimistic throughout the crisis indicating a drop of just 19 percentage points.

Interestingly men are considerably more downbeat than women with post-Covid19 confidence scores dropping 41 percentage points and 33 percentage points respectively.

Commenting on the findings Christian Barnes, Head of Strategy at AML Group said:

“It’s perhaps surprising (or a good example of confirmation bias) that despite the growing talk at the top of the year of looming market corrections, economic shutdown in China and a general sense of uncertainty, those arguably most threatened by big market falls should still have been the most confident in mid-April.”

Not surprisingly, almost half of investors (48%) are thinking more about their finances as a result of the coronavirus pandemic with 34% focusing more on their family’s financial security. Of those investors surveyed, 1 in 8 are feeling cash strapped and worried about monthly finances such as their mortgage and bills with 16% concerned about financially supporting loved ones.

UK investors stay optimistic about the future

However whilst there is obvious concern and unease amongst the retail investor community, only 8% have divested or cashed-in an investment which suggests most are playing the long game and are optimistic about the future.

44% of investors are confident that the markets will bounce back; this is highest amongst the wealthiest, and those already retired. Across the board, approximately a quarter (23%) believe this situation to be a short-term dip with a return to ‘normal’ within six months with almost one-third (30%) seeing the pandemic as an opportunity for savvy investors.

Commenting on these findings David Alterman Chief Operating Officer at The Nursery Research and Planning said:

“Despite a drop in confidence and short term concerns, it is interesting that we also see a strong sense of optimism for the future and a belief that growth will return.”

The research has shown that whilst UK investors like the idea of ethical investments they are increasingly focused on their own financial security and placing more importance on low levels of risk and short term growth. And whilst 35% of investors continue to believe it is important that their investments consider their environmental and social impact, only 25% rank the ethical and social standing of products in their top five reasons for actually making an investment.

“Self-interest and protecting those near and dear is overriding a wider sense that ethical investing is a good thing for the future,” says Christian Barnes “the need for a ‘short term fix’ is distracting and distorting their focus and there is clearly a perception that ethical investing carries a performance penalty. Which, ironically, of course proved not to be the case in the recent initial market collapse.”

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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