Investor study shows portfolio changes amid market volatility

The majority of investors globally made immediate changes to the risk profile of their investments during the volatile final three months of 2018, Schroders Global Investor Study 2019 has identified.

The study, which surveyed more than 25,000 people in 32 countries, found that 70% of investors modified their portfolios in direct response to markets’ instability. These included, 37% who moved into lower-risk investments and 35% who opted for higher-risk options. Only 21% of participants kept their investments the same.

Investors on average hold their investments for 2.6 years, a little over half the recommended five-year investment period, the study found. Geographically, investors in Japan, the US and Canada were the most patient with holding periods of at least four years, compared with 1.3 years for Argentinians, the least patient. Some 10% of investors believed they should have remained invested for longer.

This short-term approach may be fuelled by global investors expecting, on average, a 10.7% total return (income and growth) per year over the next five years, an increase on the 9.9% stated a year ago.

Charles Prideaux, Schroders’ global head of product and solutions, commented: “The ebbs and flows of markets are always going to keep investors on their toes but the key is to focus on the long term. Chopping and changing investments particularly during challenging markets is likely to be detrimental for investors’ portfolios and ultimately lead to disappointing investment returns.” Prideaux believes instead that it is critical to look through the uncertainty.

In April 2019, Schroders commissioned Research Plus Ltd to conduct an independent online survey of 25,743 investors from 32 countries around the globe. The countries included Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, the UK and the US.