Schroders Global Investor Study 2019: Majority of investors changed portfolios during 2018 market volatility
The majority of investors globally made direct 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 over 25,000 people in 32 countries – found that 70% of investors modified their portfolios in direct response to the instability. Investors were equally likely to increase or decrease the overall risk profile of their investments. These included, 37% who moved into lower-risk investments and 35% who opted for higher-risk options. Only 30% of people kept their investments the same. Investors show little discipline in a volatile environment – a behavior that might have a negative impact on returns. “In turbulent times, it is imperative that investors remain disciplined and avoid taking hasty investment decisions. The key is to focus on the long term in order to achieve lasting investment returns”, concludes Andreas Markwalder, CEO Schroder Investment Management (Switzerland) AG.
Swiss investors behaved in a slightly different way compared to investors globally; a similar proportion (72%) changed their risk profile, although they were more likely to increase high risk options (47%) than lower risk investments (25%). Approximately one-fifth (19%) of Swiss investors see unstable political situations or volatile markets as an opportunity.
Global investors on average hold their investments for 2.6 years, a little over half the recommended five-year investment period, the study found. With an average of 3 years, Swiss investors show greater staying power than their global peers. Geographically, investors in Japan (4.5), the USA (4.2), and Canada (4.1) are the most patient with holding periods of at least four years, compared with 1.3 years for Argentinians, the least patient.
Millennials fear of missing out
Millennials hold their investments for an average of 1.9 years compared to the 3.7-year average holding period for baby boomers. Over half (53%) of millennials agreed that the biggest danger to their investments was not taking enough risk to achieve their investment objectives. Apparently, millennials are less likely to acknowledge that risk is better tolerated in a long-term investment.
The global trend to chop and change investments after a shorter than recommended period, underlines that patience is not closely linked to either geographical attributes or the generation gap. However, the study shows that millennials appear to be less patient than older generations.
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