Jeremy Warner of the Daily Telegraph points to the new figures from the Investment Management Association and claims that retail investors (those who buy and sell for their own accounts) have significantly increased their holdings of shares in the form of Unit Trusts and Open Ended Investment Companies (OEIC). This he sees as possibly a bad thing for the market as retail investors are notoriously ‘late to the party’, which means all the risk has been taken and all the gains made already. But Simon Ward of Henderson New Star draws an opposing conclusion.
However, when one draws a graph of the IMA figures over the last 3 years or so a different picture emerges. Here we see a retail drop in confidence in the markets from about October 2007 until about March 2009. With inflation injected at an average of 2% over the period we now seem to be back at previous levels of retail investor exposure to the markets.
The real test will come in the coming months as the affects of PIMCO dumping Gilts and extra taxation take hold coupled with first quarter retail performance and commercial property woes setting in.
This recent recovery to 2007 levels may well be a return to a more balanced investment approach now that people have been coaxed out of the cash caves they have been sheltering in during the last couple of years.