Retail shareholders are boosting equity holdings as they search for a decent rate of return on their investments, according to an analysis of share registers conducted by Capita Registrars.
The proportion of the UK stock market held by retail shareholders rose to 11.8 per cent by the end of February, the highest level since August 2009, reports the registrar.
‘With cash offering such paltry interest rates, bond yields exceptionally low and property on shaky ground, private investors have been attracted by strong dividend yields and the recovery in corporate profits,’ comments Charles Cryer, chief executive of Capita Registrars, in the study.
In the three months to the end of February, retail shareholders invested £473 mn ($757 mn) of new money into the stock market, with £361 mn going to defensive stocks and £112 mn to cyclicals.
‘Until six months ago, investors had spent well over a year almost exclusively focused on buying defensives and selling cyclicals,’ notes Cryer. ‘There has now been a distinct change in behaviour, with investors buying both types of shares.
‘This usually indicates cautious optimism over the outlook for equities, rather than suggesting private investors feel shares are especially cheap, or especially risky.’