thewealthnet     About Us    |    FAQs    |    Contact Us
 
  Search
 
     
  Advanced Search       RSS Feed  twitter  linkedin 
Welcome to thewealthnet    |   Europe, Middle East & Africa Get The App   |   Login
  Thu 24th Aug 2017  |    Make this my homepage  
Subscribe now!
Credit Cards Accepted
World Map
    
Investors drawn to well-known stocks risk missing out on stronger performers - IW&I
20/04/2017 , News Team

More than half (57 percent) of investors looking to buy shares over the next 12 months admit to preferring well-known UK brands such as supermarkets and banks, according to a study commissioned by Investec Wealth & Investment (IW&I).  

However, IW&I has warned that by opting for household names over lower profile brands, investors risk overlooking the majority of listed companies and failing to build a diversified portfolio that could better suit their investment needs.

According to the survey, almost a third (29 percent) of investors will only buy well-known companies and 35 percent feel more confident doing so, despite only around 40 percent of FTSE 100 constituents arguably been considered household names. Almost half (47 percent) say they would retain their stake even if the shares performed poorly.

IW&I’s survey suggests that it is more than the share price alone that motivates investors to keep hold of their stocks.  Nearly a third (31 percent) are more likely to continue holding shares if they bought them as new listings while a fifth (21 percent) would continue to retain shares they have inherited.  Furthermore, one in ten (11 percent) admitted to holding shares largely because of the perks they offer such as discounts or vouchers, even though the number of these is diminishing.

The research further revealed that two-fifths (39 percent) of investors buy shares in a company when they understand what it does, and one in five (20 percent) say they prefer to invest in firms whose products and services they use. 

Guy Ellison, head of UK equity research at IW&I, commented: “It’s understandable that many retail investors will be drawn to companies they know and have heard of, or see regularly on the High Street.  However, relatively few leading companies in the UK are household names and by simply focusing on well-known brands, many investors are potentially missing out on superior investment opportunities elsewhere, while leaving themselves vulnerable to an over-concentration in certain sectors which are familiar such as retail, travel and leisure and banking.  This latter risk has been highlighted following last June’s referendum on the UK’s membership of the EU, which has contributed to the sharp underperformance of several domestically-focused, and hence ‘familiar’, names.

“Our research underlines how sentimentality can come at a price.  Successful investing requires taking a dispassionate view of your holdings and many people find this is better achieved by appointing a professional to do this on their behalf.”

Part of the Investec group, IW&I offers wealth management and investment services to private individuals, charities, trusts, international clients and financial advisers. The firm has circa 1,200 staff located at its 15 offices across the UK. IW&I has approximately £30.6 billion of client funds under management as of 30 September 2016.

Share with Linkedin Share with Twitter
 RATE THIS ARTICLE
Poor   Average   Good   Excellent
thewealthnet archives contain 47,230 articles dating back to 1997,making it the largest single source of information on the wealth management industry world-wide. To search for more articles, please click here.

 

© This article originally featured on thewealthnet. It is protected by international copyright law. If you copy this article illegally, you will be liable to prosecution. All rights in and relating to this article are expressly reserved. No part of this article may be reproduced, stored in a retrieval system or transmitted in any form or by any means without written permission from the publishers.

 
    Latest Headlines:    by Topic | All News
  Advertise   |   Contribute   |   Press Release   |   Terms of Use   |   Privacy   |   Contact Us Copyright Pam Insight Ltd., All Rights Reserved