Retail investors retain a glimmer of confidence

Retail investor confidence fell between May and November last year as the credit crunch deepened and the bear market intensified.

The fall in investor confidence was smaller than expected, however, according to the Investment management Association (IMA).

In it’s latest survey, the IMA found that its Investor Confidence Index fell by 7 points from 78 to 71 in the period from May 2008.  This is only a small reduction in confidence levels given the events in the equity markets such as the collapse of Lehman Brothers, the UK bank bailouts and the FTSE 100 experiencing its biggest decline for 24 years.

The IMA also measures investor intentions and finds that investors are less likely to make new investments as they wish to hold losing positions rather than realise losses.

Although 70% of investors believe that the economic climate has worsened, 38% see the current market conditions as presenting opportunities, particularly if they are prepared to take risks.

The survey found that it is the more discerning and cautious investors who hold more confidence about investing in the current market, whereas casual investors show more reluctance in initiating trades.

Notable amongst the survey findings, is the fact that all types of investors are shunning the property market as prices continue to fall.