UK investor confidence at record high

Six out of ten regular investors in the UK stock market (those who trade at least once a month) are more confident than they were 12 months ago, according to new research from TD Waterhouse, one of the UK’s leading online brokers. Over three quarters of UK investors expect to see their investments make strong progress in 2007.

While past performance may not be a guide to the future in investment-speak, the survey found that confidence tends to be based on experience. The most commonly given reasons for confidence in the UK market all relate to historical growth, with 26 per cent of investors citing recent strong performance of the FTSE and their own portfolios.

Looking back over 2006 an overwhelming 7 in 10 investors claimed to be satisfied with the performance of their portfolio and this figure rises to 8 in 10 for the regular trader group while less than 1 in 10 expressed dissatisfaction.

Amongst those who said they were not confident in the UK stock market over the next twelve months political uncertainty was the factor most widely referenced. When looking at all investors, 56% said they were not confident in the political climate.

The importance of the internet to retail investors featured prominently in the results, with the majority (57 per cent) of respondents saying that they use online resources to help with their decision making. The financial press and specialist magazines were in second place, cited by 41 per cent of respondents, while advice from friends and family or from a financial adviser were equally important at 30 per cent.

The research revealed a number of interesting facts about the investment trends and portfolio structures of the UK investing public:

78% of respondents said that they hold shares in UK companies, with 29% holding shares in international companies (rising to 45% amongst regular traders)

29% of respondents said they hold some form of collective fund, e.g. a unit trust/investment trust

34% of investors currently hold shares in the Financial Services sector, followed by 27% in Retail, 20% in Drugs and Healthcare, and 19% in Telecommunications. All three sectors were predicted to perform well in the coming months.

Tesco was singled out as the company most investors would like to put their money into with 11% naming the supermarket giant as the stock they would choose to buy now. BP (4%), M&S (4%), Standard Life (3%) and BT (3%) were the next most popular.

Commenting on the results of the survey, Angus Rigby, CEO of TD Waterhouse UK said: “The results of this year’s survey show that retail investors remain optimistic about prospects for the UK markets after another solid year in 2006. Confidence levels are higher than 12 months ago and it will be interesting to see if this follows through into increased levels of investor activity.

“With the majority of investors telling us that they feel confident about the UK stock market over the coming year we are looking forward to 2007.”

Despite the confidence shown in the stock market, the TD Waterhouse survey found that investors still have the highest faith in UK residential property over the next few months. A total of 57% expect UK residential property to be the strongest performing investment class, closely followed by the UK stock market, Asian stock markets and UK commercial property (all at 45%). In contrast, the US stock market seems out of favour with just 23% of investors expecting it to perform well in early 2007.