Retail investors significantly lack geographical and asset class diversification in portfolios despite them having low confidence in Australia's economic outlook and low inclination for investment risk.
Such is the finding of Goldman Sachs Asset Management's (GSAM) Retail Investor Survey, done in November last year, which found investor portfolios leaned towards Australian equities and had low exposure to fixed interest.
The research also found investors with financial advisers are more likely to have more diversified portfolios, and be aware of a bigger range of asset classes.
"Financial advisers can play a critical role guiding investors through volatile investment markets, and have a clear opportunity to educate clients on the importance of diversification, particularly for investors approaching retirement." managing director and head of third party distribution at GSAM for Asia Pacific (ex-Japan) Jessica Jones said
Jones also said investors were more likely to select a financial adviser that they had been referred to from a trusted source. Investors also want an adviser who is abreast with legislative frameworks.
Retail investors are overlooking vital macro themes as they design their portfolios.
"Of particular concern was the fact that those aged over 65, who should be focused on reducing investments in high-volatility assets, were in fact the most likely to have an allocation to domestic equities," Jones said.
Despite continued bias towards domestic equities, Jones said few investors want to increase exposure, while more are likely to increase international exposure in their portfolios.
