Current investment decisions show weak investor sentiment with no sign of a rebound, according to Colonial First State Global Asset Management (CFSGAM) research.
Market volatility owing to global issues, such as the European debt crisis, and weakening growth in the United States and China are cited as reasons for the poor sentiment.
Investors' desire for capital preservation is also attributable to the trend.
"At the moment [investor sentiment is] fairly weak and has not shown any sign of improvement," CFSGAM senior analyst of investment markets research Belinda Allen told InvestorDaily.
"Everyone is wary. It has been four years since the global financial crisis has started and many investors thought we would have seen some improvement over these four years, but we're still dealing with a lot of these same issues."
Allen said that as a result there had been an acceleration in the preference against equity managed products into areas such as cash.
She warned that although positive sustainable returns would see investor sentiment improve and investors reallocate back to equities, it would take more than one single event or a couple of positive months to cause a turnaround.
"I think it is going to be a longer grind here to get people excited about equities again," she said.
But despite low sentiment, investors have not given up on the market.
"I think people see value in the market. People understand the importance of needing to build retirement savings and I think people are looking more for income these days," Allen said.
The CFS-UWA Business School Equity Preference Index - developed by CFSGAM and University of Western Australia Business School - measures a sizeable database of managed fund data to gauge investor sentiment in Australia.
