A recent Natixis Global Investor Survey has highlighted a concerning mind-set in regards to risk, as well as primary threats to retirement portfolios and a prospective fall-out from the rising use of alternative investments. Despite this, the overall outlook for the year ahead and the general theme to the survey was largely optimistic. But just how realistic are global investors’ return expectations?
Optimistic Views for the Year Ahead
Around 7,000 global investors took part in the survey and approximately 80% of those have revealed that they expect their investments to perform just as well, if not better, than the year just gone. Nevertheless, the report has also indicated that this optimism may lead to unrealistic expectations later on down the line. This is particularly true when considering the fact that most investors struggle with risk, volatility and the safety of assets.
This has caused a divide in investors’ and managers’ attitudes, splitting them between pursuing returns and protecting capital. This is especially true as investors search for new long-term retirement solutions in a world full of alternative finance options.
Investment Portfolio Performance
The Natixis survey also highlighted that investors within the UK are optimistic about their portfolio performance too. Around half of those surveyed are expecting their investments to achieve more this year when compared with the last. The increase in pressure to take on more of the retirement burden, coupled with long-term health costs, means longer-term investment expectations are high.
Some investors have indicated that they will need at least a 9% return after inflation to meet their financial requirements. But perhaps more surprisingly, 8/10 investors believe these return projections to be realistic. This isn’t only true in the UK either, as investors in South America and the Asia Pacific region also show high levels of confidence.
Investors More Willing to Take Risks
These results seem to show a more willing attitude towards risks when compared with last year. In the UK, 79% of investors believe their current investment approach would safeguard their portfolios against a large decline in financial markets. However, 44% of these have said they are more than willing to take on more risk when compared to last year.
This further highlights the general public’s exasperation towards current interest rates, as the 0.5% Bank Rate looks set to remain fixed for at least another year. As market reports expect interest rates to remain flat for some time, people are searching for higher interest rates elsewhere despite an elevated level of risk.
Pension Freedom Reforms
Research also shows that retirement takes financial precedence for UK investors, despite new pension reforms adding a touch of confusion to the mix. This new self-reliance on retirement funds has created a false facade and an emotional attraction that will need to be balanced by a more pragmatic consideration of what is actually financially possible. Retirees are advised to diversify their portfolio if they are to invest with their pension pots; thus limiting the risk and avoiding the whole ‘eggs in one basket’ situation.
Alternative Finance Solutions
Alternative investment opportunities are growing in demand as a way of generating returns and building a diverse investment portfolio. Peer-to-Peer lending represents just one of these opportunities and offers a transparent method of alternative finance that is growing rapidly in recognition. There is a higher level of risk involved but the potential returns are more attractive than from major bank investment channels. We offer transparency by displaying our loan statistics on our website which are updated on average, daily. Wellesley will not accept a lender without ensuring that they understand totally all the associated risks. We do this by displaying them clearly upon our website and are Customer Service Team are available via the telephone, email and online chat for any information surrounding the risks involved in Peer-to-Peer lending.