One of the nation’s largest investment managers has examined investor’s attitudes in the UK relative to other major developed G7 nations with interesting results.
Chancellors from both major parties have promoted investment in UK shares, focusing mainly on pension funds due to vast retirement savings. Privatisation campaigns that once encouraged public investment in shares are now a thing of the past. The most recent effort, ISAs, has suffered neglect. The £20,000 limit has remained unchanged since 2017 and will stay frozen until at least April 2030.
The UK’s investment gap
A recent abrdn report ranked the UK last in the G7 for individual share and mutual fund ownership. In contrast, the US leads, with a third of individual wealth invested in stock market assets. Meanwhile, property remains the dominant asset class in the UK and other European G7 nations. Surveys consistently highlight the UK’s strong preference for bricks and mortar, with nearly half of adults viewing property as a better long-term investment than pensions.
| Housing | Pension | Cash | Bonds | Shares & funds | Life Assurance | Other | |
| UK | 50% | 19% | 15% | 0% | 8% | 5% | 3% |
| US | 26% | 17% | 10% | 3% | 33% | 1% | 9% |
| Germany | 57% | 6% | 16% | 1% | 9% | 6% | 5% |
| France | 52% | 12% | 13% | 0% | 13% | 1% | 9% |
| Italy | 46% | 9% | 14% | 2% | 19% | 0% | 10% |
| Japan | 37% | 16% | 35% | 1% | 9% | 0% | 2% |
| Canada | 43% | 15% | 11% | 1% | 22% | 0% | 8% |
| Average | 44% | 13% | 16% | 1% | 16% | 2% | 7% |
Source: abrdn, based on 2023 data
Pensions and risk aversion
Despite favouring property, the UK leads the G7 in pension asset ownership, likely due to its poor State Pension provision. OECD research shows that even the US provides nearly double the state pension for an average earner. Still, UK investors remain highly risk-averse, keeping most of their wealth in cash and property. Limited financial literacy could be a factor. In the US, products like 401(k) pension plans have helped raise awareness of stock market investment and its potential returns.
The value of your investment and any income from it can go down as well as up and you may not
get back the full amount you invested. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.
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