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Managing my investments
Managing my investments

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4.1 Investor activity – evidence from the industry

Over the last three weeks you’ve looked at the range of investments and funds that you can invest in. You’ve also looked at the factors that influence how investment portfolios should be structured. You start this week by looking at the pattern of investment activity and the trends in investment behaviour in the UK.

Watch the following video, in which Victoria Nye of the Investment Management Association (IMA) gives a presentation titled ‘Investors’ fund choices: what do they tell us?’

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Activity 4.1 Investor activity

Having seen Victoria’s presentation, what do you think are the key current trends for investment fund activity by personal investors?

What do you think are the factors driving these trends?

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The key trends are:

  • a growth in money invested in funds following a dip in the wake of the 2007/08 financial crisis
  • a shift to investing in mixed asset, or diversified, funds (such as bonds and property in addition to equities)
  • a shift of investments from deposits paying interest into funds offering income (for example, from company dividends) as well as capital growth. An unsurprising development, perhaps, given the fall in interest rates after the financial crisis.

Victoria also points out the tendency for many investors to be over-cautious in their investments, with 40% opting for low-risk funds. She also stresses the benefits of starting to invest as early and as regularly as possible to benefit from the compounding of investment returns over time.

One other point – the term ‘fixed interest’ is one used in the investment industry when referring to bonds.