UK investors look to cash savings to minimise risk exposure

Savings

Investors are still retreating to cash savings despite the Government’s attempts to encourage spending and investment, new research commissioned by HYCM has found.

More than 900 UK-based investors, all of whom have investments in excess of GBP10,000, excluding the value of their residential property and workplace pensions, were surveyed on behalf of the trading broker.
 
The research found that the most common asset classes at present are cash savings (78 per cent), stocks and shares (40 per cent), and property (38 per cent). 
 
A third (32 per cent) of all investors said they will be putting more money into their savings account in the coming 12 months, while 21 per cent are planning on buying more shares. With the price of gold surpassing USD2,000 per ounce on 4 August, 14 per cent of investors intend to invest in gold in the year ahead.
 
The research revealed that 43 per cent of investors have seen their investment portfolio decrease in value as a consequence of Covid-19, but the vast majority (73 per cent) said they are not planning on making any major investment decisions for the rest of 2020.
 
However, looking to the future, 35 per cent of investors are still looking at reorganising their finances to some extent in anticipation of a second wave of Covid-19 cases and the reintroduction of lockdown measures over the coming months. 
 
Giles Coghlan, Chief Currency Analyst at HYCM, says: “Investors are still clearly worried about what the future might hold. The ongoing retreat to cash savings reflects a general market desire to reduce their risk exposure in the short to medium-term. This is happening even when certain safe-haven assets like gold are posting record-breaking gains. 
 
“With three out of four investors not planning on making any major investment decisions for the rest of 2020, it looks as though many will wait to see if the promise of a V-shaped recovery comes to pass. This problem, of course, is that such hesitancy when it comes to spending and investing will only slow the pace of economic recovery, so it is something of a catch-22 situation.”
 
Stavros Lambouris, CEO at HYCM International, says: “Retail investors may be minimising risk, but this does not mean market activity has subdued. Even with news of the UK entering a recession, the Dow Jones and FTSE are still posting impressive gains, as are precious metals like gold. Clearly, professional traders are still as active as ever.
 
"Indeed, at HYCM, our clients are actively looking for new opportunities amidst the current uncertainty, and I believe this is likely to remain the case. In this low interest rate environment, traders are after assets best positioned to hold their value while at the same time striking an effective balance between risk and return.”