HL survey shows investor confidence has dipped in June

HL survey shows investor confidence has dipped in June

• The HL Investor Confidence index* has decreased by 2%.
• All geographical sectors saw a decrease in confidence apart from Europe.
• Confidence in UK Economic Growth has increased marginally by 2.5%.
• Confidence that interest rates will rise has decreased in the short term.
• Top funds and investment trusts HL clients are choosing to invest in.

Susannah Streeter, head of money and markets, Hargreaves Lansdown:

“With the trajectory of interest rates unclear, and a general election campaign providing more uncertainty, investor confidence has taken a small hit in the first few weeks of June. The Bank of England looks set to keep interest rates unchanged this time around, given steamy wage growth, despite the drop in inflation to target. Fed policymakers are also sounding caution on hopes for an interest rate cut any time soon.

With tensions ratcheting up again in the Middle East and Eastern Europe, and Vladimir Putin visiting North Korea, geo-political concerns are also returning front and centre. Big tech may still be powering ahead on a wave of AI enthusiasm, but global growth remains weak by historic standards, and the fragility in China’s property sector showing up again in data out this week. The ECB’s decision to cut interest rates is likely to have helped lift sentiment towards the European sector, as it was the only geographical region where confidence rose in the first couple of weeks of June.

Investors are a little more optimistic about the prospects for the UK, with confidence in UK economic growth increasing by 2.5%. Although the economy stagnated in April, partly due to the poor weather, inflation has headed down to target and hopes are being kept alive for an interest rate cut in August which could help boost activity in key sectors.”

Investor confidence in UK and global sectors

Victoria Hasler, head of fund research, Hargreaves Lansdown:

“Technology stocks have had a phenomenal run this year, with the MSCI ACWI Information Technology index returning 26.18% from the start of the year to date (to 14 June 2024). Plus, given the recent gains by tech giants like Nvidia and Apple, as demand for all things AI continues, it’s not surprising that Legal & General Global Technology Index Trust has been the most popular investment trust to buy among HL clients this month.  This is a passive strategy which allows investors to get exposure to these trends at a reasonable price, and it is clearly a trend in which investors have continued confidence.

The next most popular fund with HL clients at the moment is Jupiter India, another top performer, which is up 22.3% over the year to date. The recent re-election of Prime Minister Narendra Modi seems to have given investors in the region the confidence to keep buying.

Global funds are also popular for June. Global funds usually have the bulk of their assets in the US, so this as a vote of confidence in the global economy generally, but particularly in the US.

In the top ten investment trusts, infrastructure is a popular theme, and renewable energy in particular. Potentially, Labour’s plans for the creation of a new, publicly owned company, Great British Energy, could have given investor confidence in the sector a boost.  Otherwise, both global equities and technology stocks were popular, suggesting that investor confidence in these areas of the market is high irrespective of the type of fund investors use to access them.”

HL data

* Investor Confidence Index

The Investor Confidence Index is compiled by surveying HL clients on a monthly basis. Each month we send the investors’ confidence survey to 6,000 random clients and there is a representative split of our clients by age. On average around 10% of clients respond.