Investors maintain faith in equities over the long-term

UK investors remain committed to equities over the long-term, according to latest research by the Investment Management Association (IMA). This remains the case despite retail investors diversifying their holdings more over recent years.

Key findings from the research include:

Retail investors have invested a net £30 billion in equity funds since 2001, including through funds of funds.

The majority of gross retail sales continue to go in to equity funds. The figure for 2008 was 56% - the lowest recorded but still well over half.

Nevertheless the proportion of retail investors' money going into other types of funds has increased - in the three years up to the start of the credit crunch, 75% of net retail investment has been into bond, property, balanced and other funds, whereas, in the second-half of the 1990s, over 50% went in to equity funds.

In previous recessions, net fund sales stayed mainly positive, climbing strongly towards the end of the last two recessions as GDP rose back towards its pre-recession levels.

Comparisons with the rest of Europe show the relative resilience of UK fund investors' attitude towards equity funds. Net outflows from equity funds during 2008 represented only 1.0% of funds under management in the UK compared with 6.6% in the rest of Europe.

Commenting, Chris Bryant, Head of Statistics Policy at IMA, said: "The research confirms that UK investors continue to give a strong weighting to equities in their fund portfolios, albeit with greater diversification compared to previous years. But the fact that investors have put a smaller proportion of net investment into equity funds in recent years could be viewed as a sensible move towards a more diversified portfolio.

UK investors seem to see equities as a long term investment - this was shown last year when investors largely held their nerve, making much smaller net withdrawals from equity funds than other Europeans."