Retail investors ‘playing it safe’
Only the UK and Sweden are equities-enthusiastic in a continent otherwise characterised by a distinct distaste for stocks. Roxane McMeeken reports on a Morgan Stanley study
Most European retail investors are staying on the defensive, continuing to shun equity funds in favour of fixed income products, a study has shown. The UK is the main exception to the rule, with an average allocation to equity vehicles of 79 per cent.
A report by Morgan Stanley’s equity research department shows that the highest equity market penetration by retail investors in Europe comes from the UK and Sweden.
Elsewhere investors are selling equities. In Italy, for example, allocations to equity funds have fallen from 39 per cent in the third quarter of 2000 to 23 per cent in the final quarter of 2004. By contrast, bond funds receive over 47 per cent of Italian retail money, according to the research.
France’s favourite funds are cash investments, with over 49 per cent of retail flows going into money market products. This contrasts with UK investors, who put less than 1 per cent in cash funds. Spain emerged as the least keen on stocks, with an average allocation of 9.4 per cent. This compares with around two thirds of the remaining Spanish retail assets, which are split between bond and money market funds.
An author of the report, Huw van Steenis, added that fragmentation in the European fund market is still very much alive. Local tax wrappers, products and infrastructure are still the norm. “Despite much lobbying, the idea of a single fund range for Europe is some way off,” said Mr van Steenis.
