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Self-directed investors lose appetite for risk this ISA season, says rplan.co.uk

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Self-directed investors have lost their appetite for risk this ISA season, according to new analysis by rplan.co.uk, the online investment platform.

The analysis shows the percentage of new investments going into funds with higher risk ratings of 5 and 6 has fallen to 60 per cent versus 75 per cent in the same period last year, while new inflows into funds with lower risk ratings of 3 and 4 have risen to 32 per cent from 20 per cent a year ago. Investments into funds with the highest risk rating of 7 have risen slightly from 0.31 per cent to 1.30 per cent.

The percentage of investments made into equities has fallen to 60 per cent from 72 per cent in the same period last year, while investments into asset allocated funds have risen to 13 per cent from 7 per cent and fallen slightly into fixed income from 12 per cent to 11 per cent. Men’s exposure to equities has been higher, with 64 per cent of their new investments this year going into the asset class versus 52 per cent of women’s.

Six of the top 20 funds chosen this year have been trackers, versus five a year ago. The cash reserve fund has been the fourth most popular choice in 2016 whereas it was seventh a year ago.

The two most popular funds on the rplan.co.uk platform this season have been Aberdeen Property B Trust and the CF Woodford Equity Income C Fund.

Stuart Dyer, Chief Investment Officer at rplan.co.uk’s, says: “There has been a clear drop in investors’ confidence versus a year ago and no doubt the volatility in January and Brexit vote later this year have played a role in that.

“If they are concerned about Brexit then they might wish to consider investing with active managers rather than taking a passive approach because of the potential for winners and losers.

“But investors do need to look beyond the Brexit vote and adopt a longer term horizon of at least five years. They need to diversify their portfolios and ensure they are in line with their true appetites for risk.

“If they do not have a professional financial adviser then there are platforms available to help them achieve this, including rplan.co.uk, which provides tools to do this in a transparent and straightforward way.”

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