A quarter of investors fear that a Jeremy Corbyn-led government is the biggest threat to their investments in 2019, according to new research.
AJ Bell spoke with 700 investors, and found 28 per cent had the prospect of a Labour government as their biggest fear.
This contrasted with a third of investors who saw Brexit as their biggest worry.
But while there remained a range of issues which investors worried about, they were divided on what action to take next, with an almost 50/50 split between those who have increased the cash allocation in their portfolios and those who have not.
Indecision was also evident with the 47 per cent of investors who said they had not changed their allocation to UK equities this year, while 30 per cent had reduced their allocation.
Laura Suter, personal finance analyst at AJ Bell said: "Politics is clearly at the top of the worry list for investors with Brexit, a change in government and Trump fuelled trade wars being the three biggest concerns for next year. Financial factors such as interest rate rises, currency movements and a tech-stock slowdown are in a distant second place."
She added: "It makes a lot of sense that investors are shying away from new investments and reinvesting dividends given the political uncertainty.
"Building up cash reserves to take advantage of buying opportunities may prove to be a smart move, although timing the markets is notoriously difficult.
"What it does suggest though is that once the political fog clears the UK stock market may receive a boost from investors looking to snap up bargains."
But Guy Miller, chief market strategist at Zurich, had told FTAdviser he fears that sentiment towards UK assets will not improve markedly regardless of the outcome of the Brexit vote as the market will continue to fear the prospects of a Labour government.
david.thorpe@ft.com
