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Investors sell gilts amid inflation concerns

Tuesday 8th March 2011
More and more investors report selling gilts, as inflation has overtaken recession as their top financial fear, according to a barometer of investor priorities from financial marketing specialists dianomi.

From a panel of UK investors, one in five cited inflation as their top current fear, followed by recession and unemployment.
However, for 23% of UK investors aged under 50, unemployment remains the top concern, followed by recession and inflation in joint second place (12%).

The research also investigated which asset classes and sectors are proving most attractive to UK investors in the current climate.

Overall, it shows a growth in confidence over the past six months, particularly for assets such as cash, gold and property.
The research also highlighted that investors are increasingly selling gilts. Women were more likely to buy fixed-rate saving bonds than their male counterparts (37% vs 27%).

When it comes to investors’ sector preferences, emerging markets is still a clear winner, followed by natural resources and Asia. Investor confidence has improved in North America since the last survey, as well as in the technology and telecoms sector as an investment opportunity.

For the first time, dianomi also investigated the preferences of UK investors when it comes to foreign currency. The US dollar, pound sterling and Swiss franc ranked highly for purchase, while investors indicated a shift away from Japanese yen, the euro, and New Zealand dollar. Some 18% of UK investors under 50 reported trading in currencies compared to only 9% of older investors.

Cabell de Marcellus, co-founder of dianomi, said: "Although the last six months has proven very positive for stock markets, inflation has become a real concern.

"Consequently, investors appear to be inflation-proofing their portfolios by selling gilts and buying defensive equities, property, gold and other alternative investments. It remains to be seen whether inflation will climb much higher this year, or whether we are seeing a temporary spike in commodity prices, as we have in the past."

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Mike Jones

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