Investors were slightly less confident in November 2009 than in May, according to the latest findings from the Investment Management Association. This trend was found to be especially marked among older, wealthier investors and is partly due to pessimism about the UK economy - where these investors hold the bulk of their assets.

The 3,451 small UK-based retail investors who took part in the research were much more confident than they were in November 2008, but less confident than before the summer, with the number saying they were planning to invest was down by almost half – from 30 to 17 per cent – since the previous survey was conducted in May 2009.

This is reflected in the IMA investor confidence index, which was down seven points from its peak of 106 in May (with a score of 100 meaning neutral). However it is still significantly higher than in November 2008, when it was at 71.

This dip in confidence also means investors plan to be less active in the market over the next six months, with the investor intentions index falling back to 91 from a high of 99 in May.

In November, nearly 1 in 3 (31 per cent) of investors said they were likely or very likely to withdraw funds from their investments, up from just 1 in 5 (21 per cent) back in May.

Risk appetite fell across the board, but especially amongs the less wealthy, and the number of investors who planned to increase the level of caution of their investments rose, while the number of those planning to increase their risk exposure dropped.

This desire for safety is hampered by the ultra low return on cash at the moment. This poses a particular problem for older people who rely on income from their savings, and who are unwilling to risk their capital as it represents a large part of their retirement provisions.

Although investors think the global market outlook steadily improved over the 12 months to November, they were not especially bullish, as is shown by the lukewarm ratings given to different asset classes.

The UK economy is one reason for investor caution: respondents gave it the lowest rating of all geographical markets, and it was the only one which saw its rating fall over the six month period from May to November last year. 

Investors viewed equities and residential property as the most attractive asset classes, but still only gave these a score of 5.5 out of 10. The scores given to commercial property and commodities have increased the most since May, with the score given to bonds staying the same, and all scores except that for equities improving to some degree. The score given to equities has dropped following the strong summer rally.

Bonds were the only asset class to be considered less attractive than in November 2008, as investors didn’t view much upside in them amid fears over government debt levels pushing up interest rates.