The upcoming Budget on 30 October – one day before Halloween – has spooked investors, according to Hargreaves Lansdown head of fund research Victoria Hasler.
Hasler was responding to research from her firm that revealed confidence in UK economic growth has dropped by almost a fifth (19.8%).
This was mainly due to concerns around potential changes to capital gains tax (CGT) and potential pension reforms.
This, Hasler said, has resulted in a “pretty scary time for UK investors”.
Hasler added: “It would seem that investors’ initial enthusiasm for the potential stability of a new government has waned, and they now have less faith in its ability to grow the economy.”
However, it wasn’t just the UK.
Investor confidence fell 11% globally, with Japan being the only region that saw confidence increase (to 7.2%).
Confidence was largely flat in North America.
The Sentiment Market Index (how likely people are to invest compared to the previous month) also fell.
Still, there was a slight uptick in how likely investors are to buy passive funds.
Fund flows continued to be dominated by passives, particularly in the US, global and technology sectors.
Hargreaves Lansdown warned there is big overlap between most of these passive funds, as the global index now consists of over 70% US and almost 25% tech stocks.
Hasler said: “Investors who are worried about scary times ahead may want to diversify into different areas of the market such as bonds, which could benefit as interest rates fall.”
Hargreaves Lansdown’s Investor Confidence Index is compiled by sending out a survey to 6,000 of its clients randomly on a monthly basis.
