Inflation tops list of investor concerns as confidence slips

AJ Bell press comment – 19 December 2022

• Overall investor expectations are neither bleak nor buoyant, with half (49%) saying they have a neutral outlook for next year
• Although 17% of DIY investors are pessimistic about 2023, up from 9% this time last year
• Inflation is public enemy number one for UK investors
• Data from AJ Bell survey of more than 2,500 customers in December*

Laith Khalaf, head of investment analysis at AJ Bell:

“Investor confidence for the year ahead is behind where it was this time last year, but then, it’s been a pretty bruising twelve months in the markets. In that context, investor expectations for 2023 are neither bleak nor buoyant, with almost half (49%) saying they have a neutral outlook for their portfolio in the next year. Although at the bottom end of the spectrum 17% say they have a pessimistic outlook for their portfolio next year, up from 9% this time in 2021.

“Inflation has become public enemy number one for consumers and investors alike, with 32% of survey respondents saying it is a concern when it comes to their investments in 2023, up from 26% in 2021. This compares to a Covid resurgence being the biggest worry this time last year, cited by 30% of investors. Other investor concerns include global politics (24%), the ongoing war in Ukraine (15%), UK politics (10%) and interest rates (6%).

“Just 14% of investors are forecasting a fall in the UK stock market in 2023. Although again that figure is higher than the 10% forecasting a drop in UK shares a year ago. Most expect market returns next year to be relatively flat (38%) or deliver a positive return of up to 10% (37%). Just 12% think UK shares will return more than 10%, but all investors will be hoping this minority have called it right.

“Of course, investors will have their eye on the long term, rather than simply the next twelve months. While we may all have some views on where markets might turn in the coming year, we can’t have a high degree of conviction in our forecasts, because over twelve months returns are highly unpredictable. Those who want to invest, but are wary of stock market volatility in 2023, would do well to consider a regular investment plan, which smooths the ups and downs of investing and means even if the market falls, you benefit from buying in at lower prices.”

Table: How confident are you about the outlook for your investment portfolio in 2023?        

Source: AJ Bell

Table: What is concerning you most about your investments for 2023?                                     

Source: AJ Bell

*Data from a survey of 2,650 AJ Bell investment platform customers in December 2022