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Investors in a sweat over inflation

Investors in a sweat over inflation

Category: Investments

Updated: 21/03/2011
First Published: 21/03/2011

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 It is now over 6 months old so the content may be out of date.

Inflation has become the number one money worry amongst investors, just as the Office for National Statistics prepares to publish the latest official figures.

New research by the Association of Investment Companies (AIC) found that inflation has overtaken fears of a double dip recession and the impact of the VAT rise as the nation's primary financial concern.

Yet as inflation starts to bite and cash deposits continue to make measly returns, investor confidence is rising.

The AIC found that active investors plan to increase their stockmarket exposure and a record number are planning to use their ISA allowance.

At the same time, appetite for investment risk appears to be on the rise, with emerging markets the new favoured region of investors.

Emerging markets have taken over from the UK as the sector active investors believe is most likely to outperform.

Active investors are also opting for commodities and resources in ever greater numbers, with the ever popular blue chips and smaller companies funds not far behind.

So called frontier markets were found to be the least favoured region, fuelled by the political unrest in the Middle East, while Japan proved equally unpopular.

The research was conducted prior to the earthquake and resultant problems which have recently hit Japan.

"Inflation is the dominant financial worry and this perhaps explains the popularity of commodities and resources," said Annabel Brodie-Smith, communications director at the AIC.

"Investor confidence amongst active investors has risen with nearly half planning to increase their exposure to the stock market in the next few months.

"An increased appetite for risk is also clear with active investors favouring emerging markets over the UK.

"Investors must remember to take a long term view of their investments, not to get carried away by the latest 'hot' sectors and to ensure they have a balanced portfolio."

If you're unsure as to where to invest, Skipton Financial Services will be able to help.

They can compare over 1,100 ISAs and funds from over 60 providers – if you need help in choosing the right investment, call Skipton Financial Services free on 0800 731 5342

A product such as the Baillie Gifford Investment Trust ISA also offers access to a wide range of investments and funds.

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