Schroders: Global Investor Study 2019
Schroders plc, a British multinational asset management company commissioned Research Plus Ltd to conduct an independent online study of over 25,000 people in 32 countries around the world. Some of the findings of the study included the following:
People lacked confidence in exactly how much money they had invested/saved, and where it was. Only 44% of people were ‘very confident’ with how much money they had with various financial providers. This reduced sharply for those with less self-purported investment knowledge.
People were not satisfied with the performance of their investment(s). Over half (51%) had not achieved what they wanted with their investments over the past five years. Most attributed this failure to their own action or inaction.
Globally, there was a clear need to be more patient with investments. The average holding period before changing or cashing in an investment was 2.6 years, which is just over half the five-year term experts generally recommend to stay invested for. Responses to this question ranged from 4.5 years in Japan to 1.3 years in Argentina. The average holding period before changing or cashing in an investment in South Africa was 2.8 years.
People had unrealistically high annual return (i.e. income and capital growth) expectations. Investors expected on average a very high 10.7% return per year over the next five years, while one in six expected at least a staggering 20% annual return on their total investment portfolio.
In times of market uncertainty, people made immediate changes to their risk profile. In the final three months of 2018 when the MSCI World index of global equities fell sharply, only 18% of people kept their investments the same, and a further 9% made changes to their portfolio but kept the risk profile the same.
There was an expectation that investments would produce close to the income that they required. Average income expectations for the next 12 months were 10.3%, just under the 10.7% investors wanted to receive.
There was a general domestic bias for investments, and people were split over the benefits of investing in emerging markets. 31% of people preferred the majority of their portfolio to be invested in domestic funds, while 34% preferred investing in countries familiar to them. Only 31% of investors felt emerging market exposure could be beneficial to their portfolio, and almost a quarter (24%) thought emerging markets were too risky.
The survey was conducted in Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, UAE, the UK and the US between 4 April and 7 May 2019.
The research defined ‘people’ as those who would be investing at least €10,000 (or the equivalent) in the next 12 months and who had made changes to their investments within the last 10 years.