UK private equity holdings ended December at £207bn, recording the strongest performance since May 2008, according to research from Capita Registrars.
The figure jumped from £194bn at the end of November to break the £200bn mark by the new year.
The surge sees the proportion of the UK stock market in private investors hands hitting 10.95 per cent in December, up from a slump of 10.27 per cent in May last year and at its highest measure since the summer of 2009.
Activity on the stock market for private investors during the previous year was the highest in four years, with a total of £6.34bn traded in total.
A stronger than expected recovery in the UK economy is believed to underpin the return of private shareholders to the stock market, according to Capita Registrars, with confidence amongst investors remaining strong despite the downturn.
Chief executive Charles Cryer said: “Private investors began buying in a concerted way in the early summer when the stock market plunged. They have continued to invest new money in equities throughout the rest of the year as the index has steadily climbed back to pre-recession levels.”