Investors too optimistic on returns


Investors are too optimistic in their return expectations, according to Schroders, with low interest rates meaning returns as high as they are hoping for, are unlikely to be achieved.
According to the latest Schroder Global Investor Study, which surveyed 25,000 investors in 32 locations, investors in Australia expected to achieve annual investment returns of 10.9%.
This was the second-highest return expectation behind the US which hoped to achieve annual returns of 12.4%.
When this was broken down by generation, Australian millennials expected to achieve 12.9% versus Generation X who wanted to achieve 10.8% and Baby Boomers who wanted to achieve 9.2%.
These high expectations indicate why over half of global investors globally were unimpressed with their returns over the last five years.
The report also found investors were making portfolio changes during volatile periods with 27% of Australians moving a significant proportion of their portfolio to high risk investments during the last three months to 2018, above the global average of 18%.
Some 14% moved their portfolio to low risk investments over the same period.
Graeme Mather, Schroders’ head of distribution, Australia, said: “It is clear that investors still have high return expectations that are not in line with the reality of investment markets. It is also clear that more education is needed to ensure investors don’t change asset allocations, and chase market movements, at precisely the time they should not”.
Recommended for you
The $673 billion global investment manager has appointed a former Zenith sales head as it seeks to expand its reach in the Australian wealth management market.
Fund managers may be operating in a squeezed environment, but a salary guide shows they are willing to pay up for specialist talent to diversify their fund range.
Reach Alternative Investments has entered into a strategic partnership with Russell Investments to bolster its wholesale private markets offering for financial advisers and investors.
Boutique investment consulting and research house Genium Investment Partners has announced a senior appointment to drive further growth in its research ratings business.