First-time investors staying away

FIRST-time investors are steering clear of stock market funds, latest figures show, although their more experienced counterparts have continued to pile back in.

Net sales of funds such as unit and investment trusts continued their recovery last month, after plunging directly after the 11 September atrocities. But sales of individual savings accounts (Isas) - largely aimed at first-time and less frequent investors - slipped for a second month.

Novice investors seem to be ignoring the 'buy low, sell high' rule: net Isa sales nearly halved on the same month last year, even though the stock market was 17% higher in December 2000.

The Association of Unit Trust and Investment Funds blames 11 September and global economic woes, which it says have scared off many new investors. 'We traditionally see a quieter month for Isa sales in the month before Christmas anyway,' says communications head Clare Arber. 'But it does seem novice investors haven't regained their confidence yet with the markets still too turbulent for them.'

Net Isa sales fell to £260m, down £480m on the same month a year earlier. That represents a 3% slide on the preceding month. November sales were down 6% on October's figure.

But total retail sales - which also includes funds sold outside Isa wrappers – continued their revival, indicating more sophisticated investors are boldly snapping up funds. The figure rose 10% to £629m compared with the month before. That's 36% lower than a year earlier, but sales of retail funds have constantly pushed higher, month-on-month, since the market sell-off post-11 September.

The most popular funds were from the UK All-Companies and UK Corporate Bond sectors. The least popular were those focused on smaller British companies and on recession-hit Japan.

Net retail sales for 2001 as a whole were £9.3bn, down 48% on the year. Net Isa sales were off 39% at £6.7bn.