Stability in markets draws longer-term investors

Financial markets are becoming less volatile as stocks rally, it has been suggested.

The latest statistics from Interactive Investor suggest that daily retail volumes have fallen by 40 per cent over the past month.

Meanwhile, fund volumes were found by the firm to have tracked an increase over the past week.

Taken together, these trends suggest that longer-term investments are now taking precedence over short-term trades.

Over recent weeks, reports which appear to show ’green shoots’ of recovery from the recession have appeared.

These include data from Nationwide released last week, showing a rise in house prices of 1.2 per cent for May.

The FTSE 100 has also come off a March low of just over 3,500 to close last week at 4,418.

Rebecca O’Keeffe, head of investment at Interactive Investor, said: ’Over the last nine months, most market participants have been short-term traders with short-term objectives - often adopting a five hour investment horizon rather than the five years that we experienced before the recession.

’However, the increase in fund volumes could finally be a sign that we are beginning to see a return of the long-term investor to the market. This trend is likely to continue if market volatility remains low.’ADNFCR-2318-ID-19195588-ADNFCR