The study of over 900 retail investors found that nearly half of respondents (49%) have less confidence in the banking sector following the high-profile collapses of SVB and Credit Suisse earlier this year.
Even more (55%) are concerned the weakness in the banking sector will spread to the wider economy, while 45% said the banking turmoil will impact central banks’ ability to tackle inflation.
OECD: UK faces higher inflation than most G20 countries
As a result of the recent banking turmoil and market volatility, 44% of investors surveyed said their confidence in traditional investment assets, such as bonds, stocks and shares has declined, with 36% seeing their investments negatively impacted by the bank collapses.
Jatin Ondhia, CEO of Shojin, said the banking turmoil of recent months has added doubt and uncertainty to an “already testing” economic climate, with runaway inflation and rising interest rates posing questions for investors and their portfolios.
“Our research shows that UK retail investors are wary of how the shockwaves from a banking crisis could impact both their investments and the wider economy,” he said.
UK lags behind Europe on retail investor allocations to private markets
The study highlighted some of the actions that retail investors are taking amidst this turbulence in the banking sector. According to Ondhia, diversification will be a “key trend”, with investors likely to rebalance their portfolios in the coming year.
The research also suggested investors will look towards alternative asset classes rather than traditional ones in a bid to diversify their investments. Overall, 36% of respondents said alternatives are likely to play a bigger role in their investment strategy, jumping to 55% for those aged 18 to 34.
