Anxiety around market volatility is impacting investor behaviour in the UK, new research from Wesleyan has discovered.
More than a third (37%) of retail investors have chosen not to go ahead with a planned investment over the past 12 months, with more than half (56%) saying it felt too risky, while 39% cited negative economic, geopolitical or market news.
Media reporting on the economy, geopolitics and investment markets is also having a broader influence on investor behaviour. A third (34%) of investors say it often affects their investment decisions, while more than a fifth (22%) say negative headlines are making them more cautious.
James Stacey, investment specialist at Wesleysan, said: “Investors have had a lot to contend with in recent years. They’ve experienced significant volatility amid continued economic and geopolitical uncertainty, and these conditions are leading many to put the brakes on their investment plans.
“The impact of uncertainty is not new, but the intensity with which people experience it has changed. Investors can now follow every market movement and breaking development in real time, with a constant stream of updates arriving directly on their phones. That can magnify short-term concerns and make it harder to keep events in perspective.”
The research forms part of a new report from Wesleyan and Oxford Risk, A Smoother Ride, which explores how advisers can use smoothed funds to reduce the impact of market volatility and help clients stay invested.
Six in 10 (60%) investors said they would be more likely to invest if their returns were smoothed, yet only 50% of investors overall said they are familiar with smoothing, rising to 63% among those receiving financial advice.
Weslayan said awareness of smoothing varies significantly by age, from 66% among Gen Z to 30% among Baby Boomers, for whom smoothed funds could be particularly valuable during retirement and decumulation.
Both advised and non-advised investors cited security as their top priority (57%), ahead of achieving returns on their investment (51%).
Stacey added: “By reducing some of the peaks and troughs investors experience, smoothed funds can take the emotion out of investing and give clients greater confidence to stay the course.
“They don’t remove investment risk, but they can make the journey less turbulent, giving advisers another tool to help clients look beyond short-term disruption and keep their long-term goals on track.”
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