Schroders: WorldWide appetite for income

This year’s Schroders Global Investment Trends Survey tracks the views of over 20,000 retail investors across 28 countries. The survey reveals that income is investors’ top priority, with 87% looking to invest in assets to generate income. This is a trend that has been gathering momentum due to interest rates remaining low in many countries around the world.

In terms of their income goals, some investors are looking for income to reinvest and grow their portfolios while others are seeking to supplement salaries or to support their pension and retirement. Globally, Asian and United Arab Emirates investors show the highest demand for income.

The survey also highlights increased confidence amongst investors as the world economy continues to recover from the global financial crisis. Half of those surveyed intend to increase the amount they invest, up from 43% in 2014. This greater confidence is particularly evident in South Africa where 70% of investors plan to increase the amount they invest.

Meanwhile, 91% of global respondents are confident that they will see their investments grow over the next 12 months, with the average investor expecting a 12% return from their portfolio after achieving a 10% return in 2014. In terms of where these returns will come from, investors expect Asia Pacific and North America to be the regions delivering the best returns in 2015.

However, the survey reveals a mismatch between anticipated returns and appetite for risk. The average retail investor is looking to place only around 21% of their investment portfolio in high risk / high return assets (such as equities), with 45% of their funds going to low risk / low return assets (such as cash) and around a third (35%) being placed in medium risk assets (such as fixed income).

There is also a bias towards shorter-term investing with 46% of respondents preferring outcomes within one to two years. At the same time, only 23% of global investors say they will seek professional advice to change their investment strategy, while more than a third intend to invest in the same way as in previous years. This unwillingness to seek advice, combined with a preference for shorter-term and lower risk investments, could mean that achieving the desired 12% investment return may prove challenging.

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