Market uncertainty shakes up investor confidence

Persistent inflation and geopolitical concerns have seen more investors across the globe doubt their investment understanding and asset allocation.

Schroders’ latest Global Investor Study, surveying over 23,950 global investors including 1,000 Australians, has highlighted a weakening of investment knowledge due to current market uncertainties.

Less than half (47 per cent) of investors globally consider their knowledge on the “expert” or “advanced” level, compared to 60 per cent in Australia.

This was a decrease from 56 per cent of investors globally in 2022, as well as 70 per cent in Australia last year.

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Ray Macken, head of client group at Schroders, observed the declining levels of domestic confidence and shifting investor experience.

“Recent economic and market volatility has definitely hit the confidence of many investors in Australia, but it’s hardly a unique trend and is something that is clearly being felt right around the globe,” he said.

Consequently, the study found the majority of investors have either changed or intend to change their investment strategy due to the new regime.

According to Macken, a higher number of Australians are considering private assets as a preferred investment choice. 

Over 40 per cent of global investors expressed interest in private assets as a diversifying tool, alongside 39 per cent of Australians.

However, the Schroders head recognised the need for more comprehensive education around the asset class. 

“Many underestimate the holding times required for private assets investing as well as its illiquidity, believing it is one year or less when in fact it takes many years to realise returns on investment.

“While there are many considerations for investors in private assets, it’s unsurprising that the reputation of a brand and manager of a private asset fund is cited as the most important consideration,” Macken explained.

The study also identified internet and technology investments as the most popular sector which investors are flocking towards – some 57 per cent of investors globally and 51 per cent in Australia showed interest in this category.

While navigating the current investment landscape has taken a toll on overall confidence, more than 70 per cent of Australians expect higher returns in the next 12 months compared to 2022.

Macken continued: “What is undeniable is that we are entering a new investment regime when it comes to policy and market behaviour, and that most investors have adjusted, or will be looking to adjust, their investment strategy. 

“We feel ‘higher for longer’ is a much better environment for stock pickers and asset allocators.”