Investment tide turns towards growth
After years of searching for income, Australian investors are slowly turning their attention to growth opportunities, research by Investment Trends reveals.
Investment Trends analyst, King Loong Choi, said the 2014 Investor Product Needs Report showed shift away from the pursuit if income.
"For a number of years, particularly between 2012 and 2013, we had been seeing investors becoming increasingly focused on income-focused investments," he said.
"In 2014, we started to see a reversal of this trend as more investors started to prioritise growth-oriented investments.
"The increased appetite for growth has been driven by investors' concern with the world's financial markets gradually declining over the last 18 months."
With the increase in investor appetite for growth, the report found a rise in interested in capital protection products over the last year, having fallen 46 per cent between 2009 and 2013.
"As more investors look to chase growth opportunities in the coming year, fear of market reversals could drive demand for products offering market protection," Choi said.
However, he warned that there were a number of barriers relating to product range, transparency and investor understanding of the products.
"Financial planners will play a key role in helping investors overcome these barriers, with half of existing capital protection product investors saying their adviser played a role in their most recent capital protection product investment," he said.
Investors' return to growth-focused opportunities over income, has coincided with increased interest in managed funds.
Choi said managed funds continue to account for a small proportion of investors' portfolios, with the average investor allocating eight per cent of their portfolio to them.
However, the report found 46 per cent of investors said they were considering an unlisted managed fund investment, with seven per cent saying they intended to make one part of their investment strategy in the next year.
"Investors' interest in managed funds started to return in 2014, partly driven by their growing desire for greater diversification - both domestic and international - in their portfolios," said Choi.
"Younger investors are typically more open to investing in managed funds in the future than older investors."
AUTHOR
Nicholas O'Donoghue
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