Further fuelling this trend are growing concerns about the slowdown in China and its potential impact on the Australian economy, according to market researcher Investment Trends’ 2015 Investor Product Needs Report.
"Investor outlook for the Australian stock market was very bearish throughout 2015," said Investment Trends senior analyst King Loong Choi.
"As a natural outcome of falling confidence, investors are becoming more risk averse in their approach to investing.
"However, there is an important distinction in their investment behaviour this time round – the flock to safety in the form of cash and term deposits we saw in 2011-12 has not materialised in 2015."
The report also found investors have been steadily increasing their portfolio allocation to unlisted managed funds over the past few years, now accounting for nine per cent of their investable assets.
Interest in investing in unlisted managed funds is also growing, with 15 per cent of investors saying they intend to invest in unlisted managed funds in the future, up from 12 per cent two years ago.
"Investors' interest in unlisted managed funds is driven by their desire for greater diversification in their portfolios," said Mr Choi.
The report also found investors' desire for income-focused investments remains significant, with 34 per cent saying their primary investment goal over the next year is to maximise income.
However, the current low interest rate environment has meant traditional income-generating products such as cash accounts and term deposits are less appealing to investors.