Investors go 'risk on' as equities show further gains
More than a third of investors (35.4%) are planning to switch more of their portfolio into equities, according to the latest Halifax Share Dealing Market Tracker.
The decision comes as the FTSE broke the 6,400 points mark on 6 March, the first time this barrier has been crossed since December 2007.
Investor confidence in the domestic equity market has been boosted by data from the latest Purchasing Managers Index, which reported the services sector saw the fastest rise in business activity in five months last month, and the current situation in the eurozone and US.
Indeed, among those in a "risk on" mood, 100% of respondents who said that they would be looking to invest more of their portfolio in equities would do so on the London market. The New York market proved a less popular option with just 23% of respondents indicating that they would switch more of their portfolio into American stocks.
Damian Stansfield, Halifax Share Dealing, comments:"The ongoing rally in the FTSE has shown enough substance to persuade over a third of investors to switch more of their portfolio into equities. The outlook for the service sector is optimistic, countering concerns in other areas, but whether this momentum will last depends on where we are in the economic cycle whether we see global momentum continue to build.
"While the latest economic data was enough to make the Bank of England's Monetary Policy Committee vote to maintain the official Bank Rate at 0.5% and hold its Quantitative Easing programme at £375bn in March, not all investors have been convinced by the short-term outlook to change strategy.
"Indeed 45.4% of investors said they were happy with their existing strategy and 19.2% said they remained cautious about how much longer the current strength of the markets can last."
Energy & mining dig in
The energy & mining sector became the most widely held investment among investors in January, and increased its dominance in February with 68.6% now holding stocks here. However, there are still less investors in this sector than at this time last year, when 77.1% of investors had exposure here.
Investors continued to exit financial services stocks in February, with the number invested falling to 60.7% compared to 65.8% in January.
Having fallen 19.3 percentage points to 34.8% between December and January investment in general industries stocks, such as aerospace, defence, electronics and engineering bounced back in February to be the fifth most invested sector with 38.9% of investors holding stocks here.
Looking ahead to which sectors investors are looking at over the next six months and energy & mining remains the most popular sector, with 55% of people planning to invest here compared to 55.5% in January.
Financial services stocks are predicted to be the big faller in the next six months, with just 40.2% of investors looking to invest in this sector in the next six months - down 18.1% from 49.1 in January.
Damian Stansfield added: "Generally speaking, around three quarters of investors (72.1%) saw an increase in the value of their share portfolio over the last six months. While this is down slightly on January, the overall trend is still pointing upwards at present.
"At a time when more than a third of investors are planning to increase their exposure to equities, there are signs of short-term pessimism emerging as just 26.2% of investors expect the FTSE to be higher than its current level in a month's time compared to 66.1% in January. However, the long term outlook is still positive, with 60.3% still expecting the FTSE 100 to end the year higher than it began."