Investor expectations ‘unrealistic’, says global study

Investor expectations of returns in the short term are unreasonably high, particularly among millennials, according to a new study.

The Schroders Global Investor 2016 Study, which surveyed 20,000 investors in 28 countries, found that investors’ expectations of the market were unfeasible.

Schroder’s head of thought leadership Galvin Ralston said investors’ views did not match real world returns.

“Investors’ short-term outlook and unrealistically high return expectations raise concerns that investors could be left disappointed,” Mr Ralston said.

According to the survey, the global average for desired income was 9.1 per cent, while for millennials it reached 10.2 per cent per annum.

With interest rates in many countries at historic lows, the prospects of such returns were “unrealistic”, the study concluded.

The report also found that investors had short-term investing bias and expected to hold investments for an average of 3.2 years.

“While this may be fine for cash and certain types of bonds, it will often prove too short a time period to counteract the volatility associated with equities,” the study said.

Less than one in five investors said they held investments for five years or more, while results for millennials were again pronounced, with that demographic holding investments for 1.5 years less than investors aged above 35.

“We encourage investors to think long term when investing,” Mr Ralston said.

“We believe a realistic risk adjusted return can be achieved when investing over a period of at least five years.”

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