Retail investors optimistic despite credit crunch

The Investment Management Association (IMA) has published its first bi-annual Great British Investor report, which looks at the behaviour, confidence, intentions and concerns of Britain's retail investors as at May 2008. The Survey also includes two new indices, developed by IMA, to provide barometers of investor confidence and intentions.

Overall, market conditions have led to investors being more cautious but there are signs of optimism, as shown by the new IMA indices:

The IMA GB Investor Confidence Index stands at 78 (on a scale of 0 - 200, 100 being neutral), showing that investors as a whole are negative towards the market, reflecting current market uncertainties.

Despite this, the IMA GB Investor Intentions Index stands at 98 (on a scale of 0 - 200, 100 being neutral), indicating that investors are broadly neutral overall; they are reluctant to make new investments but fairly confident about keeping existing investments as they "ride out the current financial storm".

Commenting, Richard Saunders, Chief Executive at IMA said: "Despite the credit crunch and resulting negative investor confidence in May investors were surprisingly upbeat, as borne out by the IMA GB Investor Intentions Index. Events since May will no doubt have further affected confidence; with this new bi-annual survey we will be able to track the impact of the economic climate on the confidence and intentions of everyday investors."

The report also finds that investors fall into one of five groups. While investors are fairly evenly split across the groups the money is not. The groups are: discerning investors, holding 35% of investments; organised investors with 26%; adventurous investors with 16%; cautious investors with 15%; and casual investors with 8%.

Other findings from the report (as at May 2008):

One third of investors believe the credit crunch has created opportunities for new investment

Almost 50% of investors are investing for a "rainy day" with one in five investing to cover "rising living costs".

Younger investors are less pessimistic about the coming 6 months than their older counterparts: only 6% of 18-34 year olds think it will get worse compared to 23% of over 55s.

Investors in Wales are the most negative about the coming 6 months with 28% thinking that it will get worse compared to 13% of those from London.

Men have a greater risk appetite and are happy to take risk for the potential of greater returns, whereas women are more cautious.

Over 70% of investors have used a financial adviser at some point and 22% have had one for over 5 years.