Passive investments remain a sideshow in their portfolios, with 58 per cent. of the audience investing less than 10 per cent. in passives.
This was echoed in a wider survey that Schroders conducted amongst 2000 intermediaries from across the globe[2]. The results showed that the most popular investment vehicles are equity funds with over half of the respondents (52 per cent.) preferring to recommend active funds over other instruments, such as direct stocks and ETFs. Only 4 per cent. of the intermediaries surveyed prefer to recommend ETFs to their clients.
Those surveyed at the conference also revealed there is still a strong demand for income, with 56 per cent. of attendees stating income is their clients’ main investment goal – 29 per cent. said that their clients’ main investment goal is capital growth with a regular income and 27 per cent. pure income. This trend was also reflected in the wider survey, which also found that clients’ main investment goal was capital growth and a regular income. (31 per cent.)
Investors appear to be looking to adjust their portfolios to respond to the recent market volatility. The survey of 2000 intermediaries showed that most respondents expect demand for investment advice to increase over the coming months (60 per cent.), with market volatility (21 per cent.) and new investment opportunities (23 per cent.) cited as the main reasons for this increase.
In addition, intermediaries found that there is a disconnect between investors’ risk appetite and their expected returns. Those surveyed said being too risk averse and short-termism are the most common mistakes made by investors. and 86 per cent. said that some of their clients had unrealistic return expectations.
Carlo Trabattoni, Schroders Head of Pan European Intermediary and Global Financial Institutions Group, who presented at the conference, commented:
“We were not surprised to see that income and active fund management are still two strong investment themes amongst intermediaries. However, one of the main questions that the survey raises is how to address the disconnect between end investors’ risk appetite and investment timeframe, and their expected returns. We agree that actively managed funds may help reach these goals. In the current environment of increased market volatility there needs to be well informed and careful consideration in portfolios asset and risk allocations. We advise investors to speak with financial advisers to determine the right asset and risk allocation for them.”
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