Shareholders are feeling pessimistic despite the benefits of lower interest rates and a business-orientated federal budget.

According to the GPS-Melbourne Institute index of shareholder confidence, investors aren’t finding the prospect of buying shares with cheap money so appealing any more.

The index suggests that returns to shareholders could fall during the next three months.

Shareholders haven’t gained any comfort from the latest federal budget either.

The index fell 3.3 per cent in the May quarter after rising 6.6 per cent in the February quarter when there was an interest rate cut.

The latest survey was taken after May 14, two days after the budget was announced.

Shareholder confidence is forecast to fall further over the next few months.

The Melbourne Institute’s Dr Sam Tsiaplias says the return to negative shareholder sentiment continues a trend established in mid-2014, which also followed an unexpected rise in sentiment in the February quarter.

“There’s been something of a roller coaster rise in shareholder confidence this year,” Tsiaplias said on Monday.

“While February’s rate cut buoyed investor sentiment, it’s clear that this was only a temporary event, and that the negative trend has resumed despite the latest Reserve Bank rate cut this month.”

GPS director Andrew Thain said the decline in shareholder confidence could make it harder for smaller to mid-sized companies to raise capital during the next few months.