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Investors slow to reposition their portfolios despite rising risks

By Jon Bragg

November 08 2021
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Investors slow to reposition their portfolios despite rising risks

By Jon Bragg
November 08 2021

Retail investors in Australia and globally remain resistant to making portfolio changes.

Investors slow to reposition their portfolios despite rising risks

By Jon Bragg

November 08 2021
Share

Retail investors in Australia and globally remain resistant to making portfolio changes.

Only 48 per cent of retail investors in Australia and 44 per cent of investors globally have repositioned their portfolios in recent months despite rising concerns over inflation and the economic recovery.

Research conducted by eToro also found that 48 per cent of Australian investors had done nothing in the past three months to prepare for rising risks.

“Typically, you would expect most investors to take action to counter these headwinds, but our data shows the opposite is true at this moment in time,” said eToro global markets strategist Ben Laidler.

“It seems as though the vast majority of retail investors are taking a ‘wait and see’ approach in the hope that inflation is temporary and the recovery gets back on track.”

The state of the Australian economy is the biggest risk to the stock market according to 47 per cent of local investors, with the state of the global economy (44 per cent) and international conflict (39 per cent) also seen as significant potential risks.

Twenty-five per cent of Australians said that rising inflation might affect the stock market next year, and only 16 per cent believed rising interest rates would have an impact.

“Many households have reduced their debt during the pandemic, using spare cash to pay down credit cards, loans and mortgages, which makes them less susceptible to rises in interest rates,” said Mr Laidler.

“Add to this higher house and equity prices, alongside rising wages, and we see that many investors are resilient to the risks ahead.”

Inflation was a much bigger concern for investors globally, with 41 per cent declaring it as the biggest risk to their investments, up from 38 per cent in the previous quarter.

Forty-three per cent of Australians believe their investments will get a little better over the next 12 months, while 34 per cent are anticipating a correction for the domestic market.

The healthcare sector is expected to provide the best investment buying opportunities in the next three months according to 37 per cent of Australian investors, followed by the technology sector (35 per cent) and financial services (24 per cent).

EToro also investigated the sentiment of investors towards crypto and identified ongoing support from millennials in Australia.

Thirty-eight per cent of Australians aged 18 to 34 said they currently invest in crypto, and 35 per cent expect to invest in the next 12 months.

Bitcoin is expected to provide the best investment opportunity over the next three months according to 44 per cent in this age group, while 22 per cent believe Ether will be the best investment.

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