Citing factors such as recent corporate scandals, the collapse of the 'magic circle' of split-capital investment trusts, and the possibility of a war with Iraq, Reuters predicted that the UK's smaller investors will continue to put money into relatively low risk products such as bond funds and capital protected funds.

Director of Baronworth Investment Services, Colin Jackson was decidedly downbeat on the prospects for equities in the early part of next year, explaining to the news service that:

'There will not be any ISA season. Equity investments are dying on their feet. The only things that are selling are products that are capital guaranteed and that will continue into next year.'

Others, such as James Dalby, an IFA at Bates Investment Services were more positive, viewing the recent bear market as a learning opportunity for retail investors.

'Fingers have been burnt in terms of the equity market and people will hopefully have learned some lessons. You will see a lot of IFAs and others pushing the idea of diversification,' he told Reuters.