The coronavirus pandemic has created a shift in attitude in UK investors following an economic recession and financial markets crashes.
Nearly half of UK investors say they have become more risk-averse since the beginning of the COVID crisis, according to a new study from FJP Investment.
The study of 735 UK investors — who have portfolios worth in excess of £20,000 ($27,623), excluding primary property, savings, pensions or SIPPs — found 44% had become more risk-averse in their financial decision-making since March 2020.
Meanwhile, 42% say they have paused making major investments until the pandemic has passed.
The research also revealed the impact of Brexit on investors’ appetite. Britain’s exit from the European Union amplified attitudes of caution among UK investors, with four in ten (40%) saying they had become more wary of making new investments as a result.
FJP’s research found 39% of investors are currently gravitating towards more traditional asset classes, such as property.
Over half of investors (56%) are preferring to leave their money in a savings account, despite the record-low interest rates in the UK.
“In the midst of the pandemic, it is clear that a prevailing sentiment of risk aversion has set in among investors, which has only been exacerbated by further uncertainty in the build-up to and fallout from Brexit,” said Jamie Johnson, CEO of FJP Investments.
“Combined, these factors have led to a state of inertia, with investors holding fire on making any major financial decisions – indeed, many are more comfortable leaving money in savings at present, despite record-low interest rates.”
Looking ahead, 40% of UK investors plan to become far more active in their investments as the country transitions out of lockdown. A further 13% plan to invest in bitcoin (BTC-USD) or other cryptocurrencies in the coming 12 months, with this rising to 32% among those aged between 18 and 34.
A separate report showed UK investors’ habits are evolving amid a changing sustainable and societal landscape, creating a rise in a generation of conscious investors, for whom environment, social and governance (ESG) factors matter.
These factors are playing an increasingly important role in the decisions of UK investors, especially for millennials, who have influenced societal changes and spurred a growth in sustainable investing for years.
As a result, almost half (48%) of young people aged between 18 and 34 plan to make ESG investment by 2025, new research by Butterfield Mortgages Limited (BML) has found.
There has also been growing demand for ESG opportunities, driven further by the coronavirus pandemic, which has propelled many issues into the limelight.
As a result, many organisations, products and laws have come under consumer, employee, shareholder, investor and regulatory scrutiny. This has seen many firms seek funding to do better and global government’s bolstering green investment.
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