Scots investors urged to take risks or see savings erode
The call follows research by investment service firm Willis Owen which found that 56 per cent of people in Glasgow are unwilling to take any financial risk at all – the highest figure seen in any city in the UK and well above the national average of 45 per cent. The survey also found that 40 per cent of people in Edinburgh say they will not take any financial risk.
Jason Chapman, managing director at Willis Owen, warned that being too risk-averse could be a false economy. “Risk – when applied in a financial setting – has become a dirty word,” he said. “Many of us simply shut down to the possibility of adopting some risk to achieve greater returns.”
But Chapman stressed money stored away in “safe” savings accounts is currently seeing paltry levels of interest, steadily eroding its value over time.
“We may see interest rates rise over the coming year, but sensible risk taking, based on a specific set of financial goals, could be a sensible long-term option to consider,” he said.
Meanwhile, data from the Investment Association has shown that those investors who are willing to take more risk by investing in the stock market are continuing to shun UK equity funds.
Data for January showed UK funds are seeing large outflows, while fixed interest and global equity funds continue to attract investors.
Laith Khalaf, senior analyst, Hargreaves Lansdown, said: “Investors have started the new year in much the same vein as they ended the last.
“UK funds continue to leak assets, while money is still pouring into global equities and fixed income.
“The antipathy towards the UK is now so long in the tooth one has to question whether sentiment is truly reflecting prospects for the UK stock market compared to its global peers.”
Khalaf pointed out that the UK fund sectors are home to “many talented managers and UK companies have diversified international income streams”.
“Investors should make sure they’re not just following the herd if they’re thinking about ditching their UK holdings, and have considered reasons for doing so,” he said.
Overall however, the investment management sector saw strong inflows into funds during last month.
Individuals invested £3.7 billion and institutional investors about £539 million into UK authorised funds bringing the industry’s total funds under management to just over £1.2 trillion in January.