Local investors are less likely to go it alone in today’s uncertain investment climate and are more likely to seek expert advice. They also expect higher returns over the next five years. According to the Schroders Global Investor Study 2022, most investors, regardless of experience, will seek the help of a financial advisor or rely on the advice of fund managers. The study surveyed more than 23,000 investors from 33 global locations, including 400 South Africans. Most participants have an intermediate level of investment knowledge on a spectrum ranging from novice to expert. The…
Local investors are less likely to go it alone in today’s uncertain investment climate and are more likely to seek expert advice. They also expect higher returns over the next five years.
According to the Schroders Global Investor Study 2022, most investors, regardless of experience, will seek the help of a financial advisor or rely on the advice of fund managers. The study surveyed more than 23,000 investors from 33 global locations, including 400 South Africans. Most participants have an intermediate level of investment knowledge on a spectrum ranging from novice to expert.
The largest proportion (20%) of South African investors expect returns of between 20% and 25% over the next five years, although the same percentage of respondents claimed to have achieved a total return of ‘between 15% and 19% on average during the past. . five years which indicates a “decidedly optimistic outlook for South African investors compared to their global counterparts”, says Kondi Nkosi, country head of Schroders South Africa.
It says this could be attributed to the expected better-than-average performance of the country’s domestic market in 2021.
“Against the backdrop of growing global instability, as well as political changes underfoot in South Africa, this position may change or may well come to characterize the inherently positive mindset of South African investors heading into 2023” .
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Turning to financial advisors for advice
The study also shows that even the most experienced investors in South Africa are turning to financial advisors to help them navigate the prevailing uncertainty, with 44% of novice or novice investors indicating that they are more likely to seek the ‘advice from a financial advisor and 50% of intermediate investors and 43% of expert or advanced respondents say the same.
Similarly, 47% of respondents indicated they find actively or passively managed funds more attractive than six months ago and Nkosi says this is a clear indicator of a parallel increase in uncertainty about how to navigate so for many investors it is uncharted territory and an increase in people’s trust in the expertise of financial advisors.
“We must appreciate the unique and unprecedented position that South African investors find themselves in: caught in a climate of geopolitical instability and a local landscape that is experiencing a historic level of change. The role of financial advisors will be even more important in the future to help South Africans make clear and informed decisions that will reap long-term benefits.”
The study also placed specific emphasis on how local investors respond to global economic phenomena, such as rising interest rates and rising inflation.
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Response of local investors to rising interest rates and inflation
In South Africa, where inflation hit a 13-year high in the second half of the year, the findings were particularly compelling, with 43% of respondents indicating they changed their investment strategy to due to rising inflation, and 42% expressed their intention to do so. so in the future and only 14% indicated that they did not intend to make any significant changes to their portfolio.
South African investors also indicated that they have plans to respond to rising interest rates, with 66% indicating that saving more and spending less was high on their list, followed by 57 % who chose to invest in cryptocurrencies such as Bitcoin and Ethereum and 55. % prefer to pay off debt faster to save interest.
Therefore, the main types of investment that became less attractive over the past six months were government bonds and cash or cash equivalents that are vulnerable to rising interest rates.
The study also showed that half of South African investors would feel forced to take on more risk to meet their return expectations in the coming years, while 27% said they made investment decisions under pressure which they later regretted.
“These findings point once again to the need for South Africans to seek expert advice on what has become an increasingly complex investment landscape, particularly in South Africa where 53% of investors believe that the performance of your investments has a direct impact on your mental well-being. .-being.”
