UK investors prove least likely to shy from taking risks

INVESTORS in the UK are significantly more likely to increase the level of risk in their portfolios than their foreign counterparts, a new survey has shown.<br /><br />Among British investors, 37 per cent said they were likely to increase the level of risk in their portfolios in the next 12 months, according to the report by Barclays Wealth and the Economist Intelligence Unit. This compared to 29 per cent of Americans and just 13 per cent of Spanish investors, the most conservative of all the nationalities surveyed.<br /><br />But despite the harsh lessons learned by excessive risk-takers over the past 18 months, Greg Davies, head of behavioural finance at Barclays Wealth, believes an overly cautious approach could prove damaging.<br /><br />&ldquo;A significant concern now is that if investors are in aggregate over-estimating the risks of investing, this inertia will in itself contribute to prolonged pain,&rdquo; he said. &ldquo;Investors harm their own performance by excessive pessimism, but may also exacerbate the recession itself.&rdquo;<br /><br />The survey showed that almost 90 per cent of investors believe there are significant opportunities in the current environment, although market uncertainty means the majority (68 per cent) are sitting on their hands because of the fear of further price falls.<br /><br />Just over half of those surveyed said they would stick to investing in what they know, while those who plan on making adjustments to their portfolios are retreating to the safe havens of property, government bonds and commodities.