Scots private investors beat the market

Published on Monday 5 January 2009 20:20

SCOTS proved to be canny investors in 2008, beating the market and their UK counterparts when it came to picking shares, according to a new report.

Despite the UK stock market's historically poor performance last year, the value of private Scottish investors' equities fell by only 30 per cent in the year.

This compared with the UK as a whole where the value of private investors' shares fell by 40 per cent, according the report from Capita Registrars.

In 2008, the FTSE 100 index fell by 31 per cent – its worst performance in the history of the index's existence. The FTSE All Share was 32.8 per cent down on the year.

Michael Kempe, operations director of Capita Registrars, which administers company share registers, said the Scottish investors' stock performance "came as a surprise".

Kempe added: "I can't see why it would be the case other than it probably means people in Scotland have been more prudent about which stocks they have been going after and have been more risk averse. Nothing else explains it other than they have picked it correctly for the long, steady risers rather than the quick and easy wins others in the market might have gone for."

Kempe said that, although 30 to 40 per cents falls in value were a concern, private investor portfolios have tended to outperform those of some professional fund managers.

"Earlier than the professionals, private investors have got out of financials and into the other areas of the market – oil and gas and things like that are performing slightly more strongly than in other areas.

"We might all like to think the professionals know more, but actually what we are seeing is the private individuals are doing well and even leading the market in some respects."

Jim Wood-Smith, head of research at Williams de Bro, said he believed that Scottish investors might have benefited from taking a nationalistic approach to investing.

Although HBOS and Royal Bank of Scotland were the worse performing stocks on the London Stock Exchange in 2008, other Scottish equities such as the oil and gas companies may have boosted Scots portfolios. "There has always been an enthusiasm for Scottish private investors to own Scottish companies and that naturally makes for a more loyal shareholder base," said Wood-Smith.

The research takes into account the holdings of private investors in nominee accounts and pooled vehicles like investment trusts.

Alex Montgomery, head of asset management at solicitors and asset managers Turcan Connell, said equities continue to be an attractive investment class for Scottish investors.

"Investing in equities is the only way to invest in human progress," said Montgomery.