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Uncertainty Keeping Retail Investors Away: Market Pro

Investors are on track to withdraw more money from mutual funds in 2010 than in any year since the 1980s, with the exception of 2008, and this is raising some serious questions about the small investor.

Doug Cliggott, US equity strategist at Credit Suisse, told CNBC Tuesday that uncertainty is the biggest factor in this outflow.

“In so many different metrics, the American household is seeing things they’ve just never experienced before,” said Cliggott.

He pointed to the volatile stock market, the unanswered questions still surrounding the May 6 “flash crash” and the weak labor market as uncertainties spooking the retail investor.

“If we look back 10 years, the summer of 2000, there were 111 million private sector jobs in the US. There’s less than 108 million private sector jobs now,” he elaborated.

So where can an investor turn? Cliggott’s answer might seem surprising.

“We would suggest that maybe the lowest risk asset class right now for the American investor is actually within the equity market,” said Cliggott.

Specifically, he recommended electric utilities, telecom services and dividend stocks.

“It’s natural that we seek safety, especially given recent experience, but again I think the key is sometimes risk lies where you don't expect it and safety lies where you don't expect it,” he concluded.