Investor confidence dips amidst market shake-up

By Newsdesk

November 21 2023
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As inflation persists and geopolitical tensions mount, investors around the globe, including those in Australia, are grappling with uncertainties that dent their confidence and fuel doubts about their investment decisions.

Investor confidence dips amidst market shake-up

Results from Schroders' most recent Global Investor Study, which surveyed more than 23,950 individuals worldwide, including 1,000 Australians, paint a picture of eroding investment expertise and adaptability in the face of today's unpredictable market conditions.

In a striking revelation, less than half (47%) of global respondents deemed their investment knowledge to be at an "expert" or "advanced" level, with Australia exhibiting a slightly more confident stance at 60%. These figures mark a significant slide from the previous year, with a global decline from 56% and a drop from 70% among Australian investors.

Ray Macken, the head of the client group at Schroders, remarked on this trend, “Recent economic and market volatility has definitely hit the confidence of many investors in Australia, but it’s hardly a unique trend and is something that is clearly being felt right around the globe.” Adding a local perspective, he pointed out the noticeable dip in Australian investor confidence and the broader shift in investor experience.

This apprehension has prompted a majority of investors to either already alter or plan changes to their strategies, adapting to what Macken describes as a new investment regime. Notably, a considerable portion of Australians are now eyeing private assets as their investment vehicle of choice, aligning with over 40% of global investors who view these assets as a way to diversify their portfolios.

However, Macken cautioned about the knowledge gap surrounding private assets, asserting that, “Many underestimate the holding times required for private assets investing as well as its illiquidity, believing it is one year or less when in fact it takes many years to realise returns on investment.”

He also noted the weight that the credibility of fund managers and brands carry in investment choices, explaining that these factors are regarded as paramount when it comes to private asset funds.

The survey identified a particular draw toward the internet and technology sector, with 57% of global investors and 51% of Australians showing keen interest. Despite the turmoil in the investment domain, optimism is not in short supply, with over 70% of Australians anticipating enhanced returns in the next year, outpacing their outlook for 2022.

Macken summed up the current sentiment, “What is undeniable is that we are entering a new investment regime when it comes to policy and market behaviour, and that most investors have adjusted, or will be looking to adjust, their investment strategy. We feel ‘higher for longer’ is a much better environment for stock pickers and asset allocators.”

Investors may be treading on uncertain ground, but the shifts and strategies emerging from this uncertainty indicate a landscape ripe for adaptation and potentially rewarding for the savvy investor.

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