Confidence is back as investors bet on shares

Investors are ditching cash investments in a return to stocks and shares as confidence in equities makes a comeback, according to the latest results from the Virgin Money Investor Intentions Index.

The number of IFAs advising their clients to invest in cash has fallen dramatically from 86 per cent this time last year to just 55 per cent now.

Virgin Money's authoritative Investor Intentions Index tracks the confidence of independent financial advisers across the country in 10 different investment sectors as well as where they advised their clients to invest their money over the preceding quarter.

The year-on-year figures show that the proportion of IFAs recommending UK shares to investors increased from 78 per cent this time last year to 80 per cent now.

Over the same period the FTSE 100 Index has fallen from 5,649 points to 4,966. However the Index is actually in a period of recovery, having risen in value significantly and consistently from a low of 3,460 points in March this year.

And optimism in the likely performance of UK shares has rocketed in the past year as signs of recovery slowly translate into better results on the stock market. Virgin Money's Optimism League puts UK Shares top by a huge margin - 45 per cent of IFAs are most optimistic about UK equities in delivering the best return for their clients' investments, up from 29 per cent a year ago.

Meanwhile confidence in cash has disintegrated from 18 per cent of IFAs who think cash would deliver the best returns to just 7 per cent now.

Virgin Money spokesman Grant Bather said: "The FTSE is on the up and while it will be a gradual and at times unpredictable improvement, there seems to be a quiet acceptance that UK shares are recovering from the downturn. Cash is the big loser as investors have started to shirk the relative safety of cash in favour of capitalising on the long but consistent curve of recovery in the stock market."

However the reduced interest in cash has not bolstered confidence in many of the other investment sectors tracked by the Virgin Money Investor Intentions Index. Green investments continue to suffer with the number of IFAs recommending eco-friendly investments down from 49 per cent to 44 per cent in the past year.

Fewer IFAs have recommended European shares (down from 74% to 70%), property (down from 41% to 38%), bonds (down from 83% to 82%) and gold (down from 35% to 33%), Virgin Money says.

However confidence in the Far East and other emerging markets is significantly higher now than a year ago. According to Virgin Money the number of IFAs advising clients to invest in the Far East is up from 63 per cent a year ago to 69 per cent now, and in emerging markets from 71 to 78 per cent.