Originally from our sister publication, Advisor.ca.
Investors remain conservative for the short term but expect improved returns over the next decade, according to a Franklin Templeton global investor sentiment survey conducted earlier this year, which polled more than 20,000 investors in 19 countries.
Global economic instability continues to influence attitudes, with more than half (51%) concerned the global economy has deteriorated and 45% becoming more risk averse over the last three years.
The survey finds 44% of investors worldwide expect a 5% or better return on their investments in 2012, including stock holdings. Optimism increases overall when they look out 10 years, with 50% anticipating the same level of positive annualized return.
Investors in Canada
Investment attitudes in Canada echo global results; 41% of Canadians expect a 5% or greater rate of return on all their investments and 40% expect stocks to return 5% or greater.
Canadians, though, have a different appetite. Only 39% say they’ve become more risk averse in the last few years, compared to 45% globally. Also, 50% of Canadians consider stocks to be the riskiest long-term investment, compared to 52% globally.
“Opportunistic investors are best positioned to take advantage of the market’s ups and downs,” said Don Reed, president and CEO of Franklin Templeton’s Canadian operations in Toronto.
Home country bias drives behavior
The survey found most investors have strong home country bias and prefer to invest close to home in the near-term, with more than half (56%) investing at home despite the fact that only 37% believe their home country will offer the best returns.
The survey also found half of Canadians deem their country offers the best investment returns for 2012.
Most investors have also looked at emerging markets—72% have a limited portion of their portfolios invested beyond their home countries and 28% hold 21% or more of their portfolios away from home.
Globally, this increases to 44% when the time horizon is extended to 10 years—a signal that long-term investors will embrace emerging markets. Canadians’ global investment exposure will slowly increase over time, with 62% planning to hold a low percentage of their investments outside their local market by 2022.
Emerging markets investments in both stocks and bonds are expected to deliver the strongest returns versus developed markets over the next five years.