Investor Confidence Improves In August Despite Uncertainty

Published on
  • Investor confidence in all equity markets has improved in August
  • Despite double digit inflation and political uncertainty, confidence in the UK has improved
  • Investors are most bullish about the US market
  • Investors feel least confident about European markets

Investor Confidence Improves In August

It’s been a volatile year for global markets – war, inflation, central bank policy, threat of recession have all played their part in scaring investors off stocks. In June this year, investors took £4.5 billion out of funds, according to data published today by the Investment Association (IA) – the highest monthly outflow of the year so far and the second highest on record. But July bought some respite.

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q2 2022 hedge fund letters, conferences and more

aff i?offer id=1696&file id=640&aff id=1825

Find A Qualified Financial Advisor

Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now.

Though the cost-of-living crisis remains unabated, soaring inflation is no longer a shock, and markets hate shocks far more than bad news. Forward guidance on interest rate rises from both the Bank of England and the Federal Reserve, and some signs of stability in the oil market meant that global markets tempered and as such investor confidence has improved in August.

All global regions saw improvements in confidence, with the US seeing the largest jump of 27%. The UK increased too, despite double digit inflation and political uncertainty. Europe remains the region where investors hold the least optimism, but confidence even there improved by 8%.

Fund flows on the HL platform over the last month reflect the renewed confidence, with clients opting for higher-risk equities such as emerging markets, small caps and growth-style funds. Similarly the most bought investment trusts tilt towards high-growth and smaller companies as well as dividend payers, while ETF flows reveal a bias for the US – where clients have most confidence on the market outlook.

Top Funds, August (net buys, alphabetical)

abrdn Global Smaller Companies
Baillie Gifford American
Baillie Gifford Managed
Fundsmith Equity
IFSL Marlborough UK Micro-Cap Growth
JPMorgan Emerging Markets
LF Lindsell Train UK Equity
Lindsell Train Global Equity - Distributing
Rathbone Global Opportunities
Stewart Inv Asia Pacific Leaders Sustainability

Top Investment Trusts, August (net buys, alphabetical)

City Of London Investment Trust Ordinary 25p Shares
Edinburgh Worldwide Investment Trust Ordinary 1p
F&C Investment Trust plc Ordinary 25p
Greencoat UK Wind plc Ordinary 1p
Monks Investment Trust plc Ordinary 5p
RIT Capital Partners plc Ordinary GBP1
Scottish American Investment Co plc Ordinary 25p Shares
Scottish Mortgage Investment Trust plc Ordinary Shares 5p
Smithson Investment Trust Plc ORD GBP0.01
Witan Investment Trust plc ORD GBP0.05

Top ETFs, August (net buys, alphabetical)

iShares II plc Global Clean Energy UCITS ETF (Dist)
iShares III plc Core MSCI World (Acc)
iShares plc Core FTSE 100 UCITS ETF (Dist)
iShares plc S&P 500 UCITS ETF (Dist)
UBS Global Asset Management Bloomberg Japan Treasury 1-3 Year Bond UCITS ETF
Vanguard Funds Plc FTSE All World High Dividend Yield UCITS ETF
Vanguard Funds plc FTSE All-World UCITS ETF (USD) Accumulating
Vanguard Funds plc FTSE All-World UCITS ETF (USD) Distributing - GBP
Vanguard Funds plc S&P 500 UCITS ETF USD ACC (GBP)
Vanguard Funds plc S&P 500 UCITS ETF USD(GBP)

Article by Emma Wall, Head of Investment Analysis & Research, Hargreaves Lansdown

About Hargreaves Lansdown

Over 1.7 million clients trust us with £123.8 billion (as at 30 June 2022), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.