Retail Investors More Confident
More than half of retail investors globally feel more confident about investment opportunities in the next 12 months than they did a year ago, according to the Schroders Global Investment Trends Survey 2015. Nine-in-ten (91%) investors across the globe expect to see their investments grow over the next 12 months. Globally, retail investors expect an average return of 12% over this period.
The study, commissioned by Schroders among over 20,000 retail investors in 28 countries, shows an increasing appetite for financial investments compared to previous years. Half of those questioned plan to increase the amount they save or invest in the coming 12 months, compared to just 43% of those questioned in 2014 and 38% of those polled in 2013. On average, investors plan to increase the amount they save or invest by 8.5% over the next year. Overall, 87% of investors worldwide are looking to generate an income from their investments.
Almost nine-in-ten (88%) retail investors said they made a profit from their investments in the past 12 months, with average gains of 10%, and 5% reported a loss. In comparison, investors polled two years ago reported making an average loss of 4.6% since the recession.
However, despite the high levels of confidence being reported this year and optimistic expectations of double-digit returns in the next 12 months, the Schroders survey reveals a significant disconnect between expected returns and the appetite that investors have for risk, with many favoring shorter-term and lower risk investments.
“It’s overwhelmingly clear that the demand for income is prevalent as retail investors seek to meet various objectives such as financing their children’s education, purchasing a first home, setting up new businesses, or supplementing their existing income in retirement,” said Massimo Tosato, executive vice chairman at Schroders, in a release. “The necessity and challenge to generate income from investments is strong, particularly given the global low interest rate environment.”
The survey highlights a clear disconnect globally between retail investors’ return expectations and their attitudes to risk. Expecting double digit returns within the next 12 months, while only placing less than a quarter (21%) of their investment portfolio in higher risk assets suggests that investors are not taking a realistic approach to investing. It’s imperative that investors shape their portfolios to balance the risk profile with the returns they are seeking.
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