The majority of retail investors across many countries expect a 12% return from investments over the next 12 months, despite investing mainly in low risk assets, a survey from fund manager Schroders indicates.
Less than a quarter are planning to invest in equities – higher risk assets that traditionally stand a better chance of producing higher returns. Nearly half of the investors have their money in low-risk, low-return assets, such as cash, and about a third are in medium-risk assets, such as bonds.
Schroders surveyed 20,000 investors in 28 countries and also found that many retail investors have a short-term investment horizon of one to two years.
Investor confidence is riding high. Over half of those surveyed feel more confident than they did a year ago about investment opportunities, with 91% expecting to see their investments grow in the next 12 months.
Nearly 90% said they have profited from investments in the past 12 months, with average gains of 10%. This is in stark contrast to investors polled two years ago, who reported making an average loss of 4.6%.
“Expecting double-digit returns within the next 12 months, while only placing less than a quarter (21%) of their investment portfolio in higher risk assets suggests that investors are not taking a realistic approach to investing,” says Massimo Tosato, executive vice chairman, Schroders.
“It’s imperative that investors shape their portfolios to balance the risk profile with the returns they are seeking, and in most cases, that will require a level of professional advice,” he adds.
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