Investors turn to cash to avoid market turmoil - Investments - News - Moneyfacts


Investors turn to cash to avoid market turmoil

Investors turn to cash to avoid market turmoil

Category: Investments

Updated: 10/10/2011
First Published: 10/10/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Investors spooked by the recent turmoil in the markets have increasingly been entrusting their funds to the relative safe haven of cash.

The amount of money invested into cash and low risk money market funds more than doubled in the third quarter of the year, according to Skandia.

The retreat has seen sales of cash funds soar by a staggering 121% during the period to make it the third best selling sector overall.

All equity sectors bar Japan saw a decrease in sales during the quarter, further illustrating the fear currently being felt by investors.

Sales of UK equity funds suffered a 10% drop.

"Investment into cash and money market funds had been declining steadily since the last period of extreme market volatility in 2008 but has now shot up to its highest level since the first quarter of 2009," said Graham Bentley, Skandia's investment expert.

"This is understandable, nevertheless cash still only accounts for approximately 13% of sales, indicating that the majority of investors are using the platform to invest in a well-balanced portfolio for the long term.

"These investors will be taking advantage of relatively depressed equity prices, and should therefore benefit over the longer term."

The latest data from TD Waterhouse showed that investors had been looking to diversify their share portfolios in response to the volatility.

The FTSE 100, along with stock markets from around the world, has endured massive swings both up and down in recent weeks, as the problems in the eurozone continue to unfold.

Looking for the right investment? Compare investments

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Pound plummets as FTSE soars

A second significant fall in the pound has taken place. While this drop may be unhappy news for people who are about to go on holiday, it has given the FTSE 100 quite a boost, as it has passed the 7,000 mark for the second time in as many years.

Would you risk the stock market for £400,000?

It’s becoming increasingly difficult to secure decent returns on cash savings these days, yet we all know that investing in cash is the safest option. But would you risk that level of security for the chance of a £400,000 profit?

Don’t be a victim of investment fraud

Low savings rates have led many of us to desperately scour the market in hopes of finding a deal that will pay more. However, this search means that more and more savers are being tempted by unfamiliar investments.