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Geopolitical tensions and new Covid-19 variants top investor concerns

A poll by interactive investor of 1,617 visitors to its website between 17 and 23 August 2021 found 57% had concerns over the impact further outbreaks of Covid-19 would have on their portfolio.

New variants of the virus topped the list of concerns for almost a quarter of the respondents, while almost a third said they were concerned about both new variants and a new wave of the virus.

A fifth of those that took part in the poll said they would be increasing their exposure to the stock market, confident that markets will need to get used to Covid-related shocks. However, 65% confirmed they would not be making any changes to their investments.

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Only 4% said they planned to reallocate money to funds with an absolute return strategy, and the same percentage said they would move funds to perceived cheaper markets.

Lee Wild, head of equity strategy at interactive investor, said: “A new phase of the pandemic this summer, where restrictions in the UK have been removed and we return to something approaching normality, seems to be reflected in the attitude of investors.

“While many remain worried about the virus, only a small number are reducing stock market exposure because of potential new waves and/or new variants of Covid-19.

Wild added: “We’ve already seen local flare ups caused by mass events like festivals and sporting events, but the big test will come in a few months’ time when more people return to work and colder weather forces us inside.

“Many companies, especially those in the leisure and entertainment industry, have only just begun rebuilding revenues damaged by lockdowns. They will be hoping that this year’s successful vaccination programme can prevent a repeat of 2020.”

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Additional concerns highlighted in the poll were geopolitical tensions, inflation, climate change and China’s crackdown on private businesses.

Myron Jobson, personal finance campaigner at interactive investor, said: “The dilemma facing investors in volatile markets is whether to stick or twist. Ideally, even when markets are rough it is still worth keeping your money invested. History has shown that investing can yield better results than cash savings over the long term.”

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