Global Investor Study
Hongkongers more practical on investment returns vs global peers, but still too optimistic
Over the next five years, Hong Kong investors expect to make an average annual return of 9.0%, compared to their Asian (11.7%) and global (10.2%) counterparts’ expectations.
The Schroders Global Investor Study (GIS) 2017, which surveyed 22,100 investors from around the globe, found that they are over-optimistic on their returns expectation.
Over the next five years, Hong Kong investors expect to make an average annual return of 9.0%, compared to their Asian (11.7%) and global (10.2%) counterparts’ expectations. While somewhat below their global peers, their return expectations are still higher than historic market performances and are demanding in real terms: the MSCI World index, which measures the performance of global stockmarkets, achieved annual returns of 7.2% between 1987 and 2017, with all income reinvested.
Average annual return expectations on total investment portfolio over the next five years
Source: Schroders Global Investor Study, 2017
Some emerging markets have experienced bouts of high interest rates and elevated inflation, which eats into returns. This may have increased expectations for returns in some of those markets.
However, anticipated returns were also high in Japan, which has endured decades of exceptionally low inflation and periods of deflation. Investors may now believe that measures to kick-start economic growth may be about to pay off.
Schroders believes that returns in the next few years could be modest. The Schroders Economics Group has forecast a 4.2% annual return for world equities over the next seven years, or 2.1% a year after inflation is taken into account.
Keith Wade, Chief Economist at Schroders, commented: “Returns expectations are simply too high. It means that many will face a shortfall when they come to realise their investments in the future as they have relied too heavily on returns to meet their objectives.”
In the current environment, where returns are likely to be lower than in the past, some possible ways to bridge the gap would be to save more, to revise down investment objectives or re-align investment strategies by utilising a broader range of asset classes.
For more on the Schroders Global Investor Study 2017, please visit www.schroders.com.hk/gis.
Schroders commissioned Research Plus Ltd to conduct, between 1st and 30th June 2017, an independent online study of 22,100 investors in 30 countries around the world, including Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, the UK and the US. This research defines ‘investors’ as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last ten years. These individuals represent the views of investors in each country included in the study.
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