The CEO of AXA Wealth has expressed a fear that investors are potentially gripped by a ‘flight to cash’ and in doing so are avoiding the benefits of a balanced portfolio, which includes the holding of equities.
Speaking recently, Mike Kellard noted that the ‘flight to cash’ can be demonstrated by figures such as those from the Investment Management Association which show a big drop in retail fund sales during 2012. The fall comes despite equities outperforming cash 74 percent of the time over a period of five years (Barclays Equity Guilt Study 2012).
Emphasising the importance of investors not neglecting the benefits equities, Kellard has called for a balanced approach:
“I am concerned that this aversion to risk may mean the public will face more limited choice in products as providers exit the equity-based market. Advice is also vital to ensure consumers’ hard-earned money is working for them.
I will say it again, investors should not have too much exposure to equities without understanding the risk associated with investing in the stock markets. But we might fail these very same investors if we did not shine a light on the potential impact on their investments of following a “flight to cash” investment strategy, which appears to be taking hold among many investors in the current culture.”
Read his full thoughts at the telegraph.co.uk.