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The company's second Investor Outlook report, which tracks investor confidence on a six-month basis, said only one in five investors felt confident about the future of markets.

Further, 53 per cent of those who felt apprehensive about the future said they believed the return from the FTSE100 index had been poor and that its downward trend would continue.

The report said investors had acted on their concerns, with 28 per cent moving money into more cautious investments over the past six months, representing a 17 per cent increase compared with December’s report.

The report also showed that the average amount investors said they had in equities had fallen from £51,000 to £23,000 in six months, a 55 per cent drop.

More than half of investors, 54 per cent, said they felt apprehensive about their stock market investments, up from 37 per cent in December. This had led to 65 per cent reviewing their holdings.

Nathan Moss, managing director at Lloyds TSB, said: “Stock market investors are ditching the FTSE in droves as confidence slumps. But this approach could be costly in the long run. It is essential investors seek professional advice before making an impulse decision they could regret later when the market rallies.”

This decline in confidence has been mirrored across the world, according to the State Street Investor Confidence index for August. The index measures confidence on a quantitative basis by analysing the actual buying and selling patterns of institutional investors.

European investors felt less optimistic than in July, with confidence levels declining from 80.3 to 77.3. Globally, confidence decreased by 6.8 points to 77.2, the level for August last year having been 99.6, State Street said.