Investors urged to take a more realistic approach

Investors are upbeat about growth over the next 12 months but have been warned that they need to take a more “realistic approach” to investing.

The Schroders Global Investment Trends Survey 2015, published on 13 May, questioned 20,706 individual investors in 28 countries, including the UK, who intended to invest €10,000 or the equivalent over the next 12 months.

It found that 50 per cent of those questioned intended to increase the amount they saved or invested, up from 43 per cent last year and 38 per cent in 2013.

A total of 88 per cent said they made a profit from investments in the past 12 months, with average gains of ten per cent, with five per cent reporting a loss. Over the coming 12 months, investors were expecting an average return of 12 per cent.

Typically, retail investors were looking to place only around 21 per cent of their investment portfolio in higher risk/higher return assets such as equities, with 45 per cent of their funds going to low risk/low return assets such as cash and around a third (35 per cent) in medium risk assets such as bonds.

Massimo Tosato, executive vice chairman of global asset managers Schroders, said: “It’s overwhelmingly clear that the demand for income is prevalent as retail investors seek to meet various objectives such as financing their children’s education, purchasing a first home, setting up new businesses or supplementing their existing income in retirement.

“However, our survey highlights a clear disconnect globally between retail investors’ return expectations and their attitudes to risk. Expecting double digit returns within the next 12 months, while only placing less than a quarter of their investment portfolio in higher risk assets suggests that investors are not taking a realistic approach to investing.

“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.”