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Graham Bentley, head of investment marketing at Skandia

Investors dump cash and property in favour of overseas equities

Investor confidence appeared to gather pace in quarter four 2012 as investors continued to move away from the perceived safe havens of cash and property, favouring equity investments instead, according to the latest investment trends data from Skandia, part of the Old Mutual Wealth.

Sales of cash fund plummeted 25 per cent in Q4 compared to Q3 2012 accounting for just 4.5 per cent of sales, the lowest volume since 2011. Property funds were the other big loser with volume dropping 22 per cent to just four per cent of sales.
In contrast, the big winners in Q4 were European equity funds which saw sales increase by 20 per cent as investors looked to benefit from depressed prices as a result of the Euro crisis during 2012. Emerging market equity funds also saw a strong increase in sales (up 10 per cent) and as well as managed multi asset funds (up nine per cent).
UK equity and global specialist funds did not see any significant shift in volume in Q4 but remain the best selling equity funds with 16 per cent and 11 per cent of sales respectively.
Investors continued to seek balance in their portfolios through fixed interest investment with the UK fixed interest sector retaining the top spot again in 2012, accounting for nearly a quarter of all sales on the platform at the end of Q4 2012. International fixed interest funds also proved popular in Q4, with sales up nine per cent on Q3.
In terms of individual funds, equity income dominated the top ten with five funds, including the M&G Optimal Income fund in first place in Q4 2012. Two of Skandia’s Spectrum risk rated funds also made it into the top ten, showing that many investors are focused on controlling risk as well as generating returns.
Graham Bentley (pictured), head of investment marketing at Skandia, says: “2012 was a turbulent year for investors with the Eurozone debt crisis and the US fiscal cliff looming over the markets. Understandably, investors continued to be nervous over the first half of the year and many investors chose to keep their investments in asset classes likely to experience below average volatility.
“However towards the tail end of 2012, investors started to see signs of recovery as the ECB took action, the FTSE rallied and the US economy started to shows signs of a turnaround. As a result customers started dipping their toes back into previously unloved sectors and moving away from cash and money market funds.
“Regardless of what 2013 holds for the markets, it’s important for investors to continue speaking to their financial adviser to ensure they maintain a well diversified portfolio that matches their risk profile, rather than chase returns based on short term swings in market performance. After all, staying invested provides a real potential to grow the value of a portfolio over the longer term, whereas timing the markets is close to impossible.”

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