Are your fears just perception or reality?

Jul 24, 2019 | Tony Byrne's View

 

Invesco carried out a large survey of advised investors in 2018 to find out more about their attitudes to investment.  It produced some interesting results as follows.

Investors considered themselves to be higher risk takers

71% considered themselves to be intelligent investors and 66% thought they were confident investors.

55% agreed they struggled to avoid making emotional decisions when market shocks occur and 62% felt helpless when trying to protect their portfolios from market shocks and were worried about them.

Investors were far more likely to invest when share prices were rising and reached a peak than when they were falling and reached a low point.

65% focused on preserving capital over seeking returns and 62% admitted the fear of losing money due to volatility impacted the level of investment they made.

77% agreed that risk taking is an inherent part of investing.

76% confirmed they were satisfied with the level of risk they were taking when investing.

74% of advised investors expected an average rate of return of 10.1% per annum whereas self-directed investors only expected a return of 7.1% a year.  Based on the last 10 years of actual returns from equities these expectations were unrealistic.

The second biggest concern for investors was their investments underperforming the market, whereas advisers thought that was their clients’ seventh highest concern.

Investors considered the most important issues that were making investments riskier were global trade wars, Brexit, the weakness of Sterling and the global economic slowdown.

Fund managers have created investment solutions which deliver greater precision in risk management in recent years.  This has resulted in advisers using the following investment solutions;

63% Multi-asset growth funds

57% Multi-manager (fund of funds)

56% Risk-rated funds

51% Multi-asset income funds

Advisers were asked to rank the biggest advantages of solutions like these. By far the most popular reason for advisers using them was because they offer exposure to different asset classes and strategies.

Invesco’s conclusions were as follows;

  • A majority of investors would like to better insulate their portfolios on volatile markets
  • Portfolio volatility is only reduced if asset classes have a known correlation to one another
  • Traditional multi-asset funds continue to play a role in client portfolios
  • Modern investment solutions potentially deliver greater precision in risk management

So if you would like to invest your money free from fear in a more controlled manner in the future, do contact us for further advice.  You know it makes sense.

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