A report by Merrill Lynch Wealth Management has cast a dark shadow over the fund management industry which has suffered a significant loss of confidence over the last 18 months. It is reported that almost half of the world's 8.6 million wealthy investors, those with over $1 million to invest, appear to have lost faith with fund management companies with many of them withdrawing funds.

While it is very common for investors to blame fund managers as and when investment markets are difficult, the fact that it is the wealthy end of the sector which appears to be pulling money out of the market even now is a concern. However, the confidence of investors in the worldwide stock market is very fickle to say the least and it would only take a handful of positive reports in Europe and in the US, together with a jump in stock markets, to get many investors back on board.

However that said, it is also worth remembering that many investors have suffered substantial losses over the last 18 months with many unlikely to regain their former wealthy positions in the short to medium term. We have seen a significant reduction in overall wealth around the world with those classed in the "wealthy category" down 19.5% year-on-year and those in the high net worth category (with assets of over $30 million) down by 14.9%.

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