The latest Investor Product Needs Report from research firm Investment Trends has reported that while investors are looking to boost their exposure to growth-oriented investments, they maintain bearish about the current market, with the average investor predicting capital gains of between 1 and 5 per cent for the coming 12 months.
“Investors’ desire to increase their domestic share exposure has waned in recent years,” said Investment Trends senior analyst King Loong Choi.
“In addition, investor appetite to increase overseas exposure has been erratic, with geopolitical events and a perceived potential military conflict with North Korea generating increasingly wide swings in intentions.”
Nevertheless, maximising capital growth is the main focus for a quarter of investors, up from the 18 per cent who selected that option in 2016. Additionally, one-third of investors surveyed said they want to prioritise a balance of risk management and capital growth.
According to Mr Choi, this trend can be attributed to a “volatile geopolitical climate” coupled with low interest rates.
“Investors expect to face a wide range of investment-related challenges over the coming year, but positively, many of these challenges can be alleviated with assistance from investment product providers,” Mr Choi said.
Eighty-four per cent of investors surveyed agreed that a well-diversified portfolio was an important factor in taking on the coming year.
Continuing, Mr Choi noted that while investors appreciate the importance of diversification, it’s not always easy to build such a portfolio.
“Product providers that best assist investors with their desire for diversification will stand out,” the analyst said.
At the same time, 40 per cent of those surveyed said they had difficulty accessing investments like international shares, private equity funds, commercial property and private business or venture capital.
This taste for diversification is also fuelling investor desire for managed funds, Investment Trends continued, noting that in the last four years the proportion of investors expressing interest in the vehicle nearly doubling from 7 per cent to 13 per cent.
Mr Choi said: “Growing interest in managed funds is buoyed by investors’ desire for diversification across asset classes, the perceived ease of not having to select individual stocks, and the access to a range of investment strategies that managed funds provide.”
As it stands, 55 per cent of investors who expressed an interest in managed funds said they would choose to invest directly via a fund manager, online broker or the ASX mFunds platform.
“Fund managers have a golden opportunity to meet this growing demand by facilitating easier access to their product suite,” Mr Choi said.