Return expectations up

Financial planners’ share market return expectations are up for the first time in four years, reflecting an increase in investor sentiment, according to the Investment Trends Adviser Sentiment Tracker.

Past research showed that between late 2009 and late 2012 advisers’ share market return expectations for the next 12 months kept declining – from 14 per cent to 7 per cent (excluding dividends).

Senior Analyst at Investment Trends, Recep Peker, said this was in line with what investors were feeling.

“This year for the first time in four years we’ve seen planner expectations increase again,” Recep said.

This year’s report, which was based on a survey of more than 700 financial planners in August, found planners expect the share market to grow by 8 per cent over the next year (excluding dividends).

“This is in line with the mood of the investors, who are also more optimistic in 2013.”

The declining sentiment witnessed in the last four years was mostly due to the volatility, bad economic news, European Sovereign Debt Crisis and the United States debt ceiling, according to Peker, but planners’ mood is more resilient than how their clients are feeling.

“Investors are a lot more sensitive to short term events in the markets than financial planners are,” Peker said.

“When new clients were coming in last year, they were scared about going into growth assets and were seeking capital preservation, which is why at the end of last year planners were investing record levels of client money in cash and term deposits, but they were still allocating over 60% of new client funds to growth assets which would have benefited substantially from the market performance experienced over the last 12 months.”