UK investors turn to cash amid uncertainty

UK investors are turning to cash amid higher interest rates and geopolitical uncertainty, according to a new survey from Schroders.

Around 40 per cent of investors are holding cash, on par with those invested in actively-managed funds, the Schroders Global Investor Study 2023 has found.

The asset manager surveyed more than 23,000 people from 33 locations globally. It found that UK investors have significant return expectations with people wanting a minimum 8.2 per cent of income. In order to achieve this, 37 per cent of UK investors are investing in crypto currencies while 36 per cent are either saving more and spending less or making higher risk investments in pursuit of returns.

Read more: UK investors seek diversification to weather economic turmoil

Majority of UK investors, some 86 per cent, are changing their investment strategy due to rising inflation and high interest rates.

“The regime shift in inflation and rates is impacting how investors think about their portfolios, with many clearly allocating to cash investments as a result,” said Doug Abbott, head of wealth UK client group.

“However, with investors expecting to achieve returns of 10.5 per cent per annum over the next five years, it is clear they will need to allocate their portfolios to a range of asset classes to achieve their objectives. The long-term structural trends of demographics, de-globalisation and de-carbonisation all point to inflation remaining higher than it has been for the last decade and long-term investing will be critical.”

Overall, investors are turning more and more towards sustainable funds, with more than a third expecting such funds to offer higher returns. In addition, the proportion of investors globally shunning sustainable investing due to performance concerns has fallen by half compared with last year’s survey.

Read more: UK investors eschew ESG for profits amid cost-of-living crisis

Read more: Opportunities in mainland Europe for UK investors