UK rich switch to cash and blue chips

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Britain’s richest people are shifting their wealth from riskier investments into cash and blue-chip industrial stocks, switching about £70bn into the shares of leading UK companies since November.

The report by Tulip Financial Research said the turmoil in financial markets had prompted a flight to quality by the wealthiest 1 per cent, who had sold commercial property assets and investments such as unit and investment trusts.

Almost half had increased their cash holdings, while a quarter had bought shares in familiar UK-listed companies – often only shares in the FTSE 100.

“They are still broadly perceived as low-risk investments over the long term,” said John Clemens, Tulip managing partner. “The inflow of cash has helped maintain the share prices of FTSE 100 companies.”

The report is based on Tulip’s regular survey of the UK’s wealthiest individuals, 470,000 adults living in 335,000 households. They own more than £1,600bn of cash, bank deposits and investments easily converted into cash – two-thirds of the country’s liquid private wealth.

In November, there was little evidence of change in strategies, but by last month, almost half had switched their investments or were planning to do so. Those most likely to be changing their portfolios were the wealthiest – the 135,000 people with average liquid assets of £7m.

The wealthiest 1 per cent of investors reduced their holdings in unit and investment trusts by almost £50bn between surveys, and property-related investments by £21bn since November.

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