Lloyds Bank Private Banking Investor Sentiment Index for March revealed that investor confidence plummeted to its lowest level since the index was launched three years ago.
According to the March index, the investor sentiment stood at 2.26%, down from 15.76% a year earlier.
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The result has been mainly driven by a change in attitude towards UK equities, which has become negative for the first time at -2.49% compared to 36.49% in the prior year.
However, in terms of market performance, UK equities have nudged up by 0.3% month-on-month, though investor sentiment has been affected by bad news and falling share prices at the start of the year.
Seven of the ten asset classes reported declining performance in March, with gold and UK government bonds being the exemptions to the trend.
Perception of commodities improved during this period, the first month-on-month increase since November, rebounding by 6.85%.
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By GlobalDataAs a result, the overall sentiment towards commodities has become higher than sentiment towards UK equities for the first time since April 2013.
Lloyds Bank Private Banking chief investment officer Markus Stadlmann said: "The first ever move to negative sentiment towards UK equities is potentially significant. Investors tend to focus most of their efforts on domestic markets, so a negative view of the UK equity market suggests an increasingly dour view overall, which is reinforced by the Index dropping to its lowest ever level.
"At the same time, we are seeing some glimmers of a recovery in the performance of some asset classes, suggesting that broad sentiment may lag the markets in some areas. Positive sentiment towards gold is increasing sharply as performance recovers well, but investors should always be wary about becoming too euphoric about certain markets based on short-term returns."
