Schroders Global Investor Study 2023: +11.5% Annualised Returns for Next 5 Years, 88% of Investors to Adjust Investment Strategy for New Era of High Inflation & Interest Rate, Top 6 Most Attractive Investment are Active Investment & Mutual Fund, Digital Assets, Cryptocurrencies, Private Assets, Equity ETFs, Government Bonds
24th November 2023 | Hong Kong
Schroders has released the Schroders Global Investor Study 2023, providing key insights of 23,000 investors globally on their investment outlook, preferred investments, views on private assets & sustainable investment (Survey May to July 2023). Of the 23,000 investors, 78% agree that there is a regime shift for policy & markets (higher inflation & interest rates) and 88% are adapting investment strategy for this new era (Yes 54%, No but intend to change 34%). The Expected returns over next 5 years (2023 to 2028) is +11.5% annualised return. The Top 10 Most Attractive Investment – Investment / Mutual Fund (Active Management) 46%, Digital Assets 43%, Cryptocurrencies 43%, Private Assets 41%, Equity ETFs 38%, Government Bonds 37%, Cash & Equivalent 36%, Listed Equities 36%, Investment / Mutual Fund (Index / Passive) 34%, Corporate Bonds 31%. Top 10 Least Attractive Investment – Cryptocurrencies 23%, Government Bonds 23%, Cash & Equivalent 23%, Corporate Bonds 20%, Digital Assets 19%, Listed Equities 18%, Investment / Mutual Fund (Index / Passive) 18%, Equity ETFs 17%, Investment / Mutual Fund (Active Management) 13%, Private Assets 14%. Top 5 Trends that will Impact Portfolio Value – Business adoption of artificial intelligence, Scrutiny & regulation on technology companies, Changing business tax rates, Higher Inflation & interest rate, Trust in financial system. Average portfolio allocation to private assets – 16.4%. Expert investors average portfolio allocation to private assets – 23.1%. Think they can buy private assets through financial advisor – 46%. Top 6 Preferred Private Assets – Private Equity 30%, Real Estate 24%, Infrastructure & Renewable Energy 23%, Insurance-Linked Securities 8%, Microfinance 5%, Private Debt 3%. Top 4 Reasons to Invest in Private Assets – High Returns 56%, Diversification 51%, Sustainability / Impact 40%, Lower Volatility 33%. Top 6 Factors to Consider for Private Assets – Track Record 61%, Reputation & Brand 60%, Costs & Expenses 55%, Investment Strategy 49%, Fund Size 31%, Sustainability / Impact Credentials 17%. Top 5 Barriers to Investing in Private Assets – Transparency 65%, Less Experience & Knowledge 64%, Less Liquid / Long Holding Period 63%, Costs & Expenses 55%, Large Minimum Investment Size 37%. Target Holding Period of Private Assets –1 Month to 1 Year 28%, 1 to 5 Years 44%, 5 to 10 Years 18%, More than 10 Years 8%. On Sustainable Investment – 83% agree that Companies taking sustainable actions will help them generate long-term value. Top 6 Important Areas Asset Managers Should Engage – Climate (Eg. Net Zero) 33%, Natural Capital & Biodiversity (Eg. Deforestation) 26%, Human Capital Management (Eg. Health, Safety) 20%, Inclusion & Diversity 8%, Human Rights (Eg. Ethical Supply Chain) 6%, Governance (Eg. Shareholder’s rights) 6%. Top 5 Companies Type Investors Prefer to Avoid – Companies with High Emissions 49%, Tobacco Producers 42%, Companies with Poor Workforce Practices 36%, Companies involved in Fossil Fuel Production 33%, Companies involved in Arms Supply / Production 22%. Top 3 Reasons for Sustainable Investments – Environmental Impact 55%, Societal Principles 42%, High Returns 34%. See below for key findings & Summary | View report here
“ +11.5% Annualised Returns for Next 5 Years, 88% of Investors to Adjust Investment Strategy for New Era of High Inflation & Interest Rate, Top 6 Most Attractive Investment are Active Investment & Mutual Fund, Digital Assets, Cryptocurrencies, Private Assets, Equity ETFs, Government Bonds “
Johanna Kyrklund, Schroders Co-Head of Investment & Group Chief Investment Officer: “In an investment landscape being increasingly shaped by the ‘3Ds’ of de-globalisation, decarbonisation and demographics, investors are still getting used to the fact higher inflation and higher interest rates are here to stay. Every asset has had to reprice to compete with a yield on cash in the bank. Valuation matters once again. Compared to the last 15 years, you may now need to be more flexible and active in the way you invest. The results of the study show that some investors are adjusting quicker than others.”
Nils Rode, Schroders Capital Chief Investment Officer: “The range of options to access private markets is widening, and smaller investors are taking note. They’re looking for every available tool to achieve their desired outcomes, and private assets represent a significant number of return drivers. We believe this is a hugely positive development, and the case for including a private asset allocation – where appropriate – is arguably stronger than ever.”
Andy Howard, SchrodersGlobal Head of Sustainable Investment: “This year’s results underline the widespread and growing recognition of the importance of active ownership to sustainable investment. Companies across industries face a wide range of challenges and opportunities, and intensifying pressures to adapt and evolve. As active managers with a long term and fundamental focus, using our voice and influence to encourage companies to build healthier, more sustainable business models has long been important and is becoming more so as those trends intensify.”
Schroders Global Investor Study 2023
Schroders has released the Schroders Global Investor Study 2023, providing key insights of 23,000 investors globally on their investment outlook, preferred investments, views on private assets & sustainable investment (Survey May to July 2023).
Summary:
- Investors in Survey – 23,000 Global Investors
- Regime shift for policy & markets (higher inflation & interest rates) – Agree 78%
- Adapting investment strategy for this new era (higher inflation & interest rates) – 88% (Yes 54%, No but intend to change 34%)
- Top 10 Most Attractive Investment – Investment / Mutual Fund (Active Management) 46%, Digital Assets 43%, Cryptocurrencies 43%, Private Assets 41%, Equity ETFs 38%, Government Bonds 37%, Cash & Equivalent 36%, Listed Equities 36%, Investment / Mutual Fund (Index / Passive) 34%, Corporate Bonds 31%
- Top 10 Least Attractive Investment – Cryptocurrencies 23%, Government Bonds 23%, Cash & Equivalent 23%, Corporate Bonds 20%, Digital Assets 19%, Listed Equities 18%, Investment / Mutual Fund (Index / Passive) 18%, Equity ETFs 17%, Investment / Mutual Fund (Active Management) 13%, Private Assets 14%
- Investor Risk Tolerance Compared to 5 years ago (2023 vs 2018) – 65% & 56% of Investors (Age 18 to 37 & Age 38 to 50)
- Investor Risk Tolerance Compared to 5 years ago (2023 vs 2018) – 46% & 45% of Investors (Age 51 to 70 & above Age 70)
- Top 5 Trends that will Impact Portfolio Value – Business adoption of artificial intelligence, Scrutiny & regulation on technology companies, Changing business tax rates, Higher Inflation & interest rate, Trust in financial system
- Expected returns over next 5 years (2023 to 2028) – Increase +11.5% annualised return
- No. of investors expecting higher returns (Next 1 year higher then previous 1 year) – 60% of investors
- Average investment loss before considering to sell – Decrease -11.3% of losses before selling
On Private Assets & Sustainable Investment:
- Top 6 Preferred Private Assets – Private Equity 30%, Real Estate 24%, Infrastructure & Renewable Energy 23%, Insurance-Linked Securities 8%, Microfinance 5%, Private Debt 3%
- Top 4 Reasons to Invest in Private Assets – High Returns 56%, Diversification 51%, Sustainability / Impact 40%, Lower Volatility 33%
- Top 6 Factors to Consider for Private Assets – Track Record 61%, Reputation & Brand 60%, Costs & Expenses 55%, Investment Strategy 49%, Fund Size 31%, Sustainability / Impact Credentials 17%
- Top 5 Barriers to Investing in Private Assets – Transparency 65%, Less Experience & Knowledge 64%, Less Liquid / Long Holding Period 63%, Costs & Expenses 55%, Large Minimum Investment Size 37%
- Target Holding Period of Private Assets –1 Month to 1 Year 28%, 1 to 5 Years 44%, 5 to 10 Years 18%, More than 10 Years 8%
- Average portfolio allocation to private assets – 16.4%
- Expert investors average portfolio allocation to private assets – 23.1%
- Think they can buy private assets through financial advisor – 46%
- Companies taking sustainable actions will help them generate long-term value – 83% Agree
- Top 6 Important Areas Asset Managers Should Engage – Climate (Eg. Net Zero) 33%, Natural Capital & Biodiversity (Eg. Deforestation) 26%, Human Capital Management (Eg. Health, Safety) 20%, Inclusion & Diversity 8%, Human Rights (Eg. Ethical Supply Chain) 6%, Governance (Eg. Shareholder’s rights) 6%
- Top 5 Companies Type Investors Prefer to Avoid – Companies with High Emissions 49%, Tobacco Producers 42%, Companies with Poor Workforce Practices 36%, Companies involved in Fossil Fuel Production 33%, Companies involved in Arms Supply / Production 22%
- Top 3 Reasons for Sustainable Investments – Environmental Impact 55%, Societal Principles 42%, High Returns 34%
- Active ownership – 95% of investors heard of the term
- Understand meaning of active ownership – 81% think they know what it means
- Will increase allocation to sustainable assets with more education – 50% of investors
- Lack of data on sustainable investment – 54% of investors are holding back investment
Schroders Global Investor Study 2023
1) Investor Outlook & Investments
Regime shift for policy & markets (Higher inflation & interest rates):
- Agree – 78%
- Neutral – 18%
- Disagree – 4%
Adapting investment strategy for this new era (higher inflation & interest rates):
- Yes – 54%
- No, intend to change – 34%
- No – 12%
Most Attractive investment:
- Investment / Mutual Fund (Active Management) – 46%
- Digital Assets – 43%
- Cryptocurrencies – 43%
- Private Assets – 41%
- Equity ETFs – 38%
- Government Bonds – 37%
- Cash & Equivalent – 36%
- Listed Equities – 36%
- Investment / Mutual Fund (Index / Passive) – 34%
- Corporate Bonds – 31%
Unchanged (No change to investing preference)
- Investment / Mutual Fund (Index / Passive) – 47%
- Listed Equities – 46%
- Corporate Bonds – 46%
- Private Assets – 44%
- Equity ETFs – 43%
- Investment / Mutual Fund (Active Management) – 41%
- Cash & Equivalent – 40%
- Government Bonds – 39%
- Digital Assets – 37%
- Cryptocurrencies – 34%
Least Attractive Investment:
- Cryptocurrencies – 23%
- Government Bonds – 23%
- Cash & Equivalent – 23%
- Corporate Bonds – 20%
- Digital Assets – 19%
- Listed Equities – 18%
- Investment / Mutual Fund (Index / Passive) – 18%
- Equity ETFs – 17%
- Investment / Mutual Fund (Active Management) – 13%
- Private Assets – 14%
Investor Risk Tolerance Compared to 5 years ago (2023 vs 2018):
- Age 18 to 37 – 65% higher risk (35% same / lower)
- Age 38 to 50 – 56% higher risk (54% same / lower)
- Age 51 to 70 – 46% higher risk (54% same / lower)
- Age 71 & above – 45% higher risk (55% same / lower)
Top 5 Trends that will Impact Portfolio Value:
- Business adoption of artificial intelligence – 48%
- Scrutiny & regulation on technology companies – 44%
- Changing business tax rates – 44%
- Higher Inflation & interest rate – 42%
- Trust in financial system – 41%
Investor Survey Insights:
- Expected returns over next 5 years (2023 to 2028): +11.5% annualised return
- No. of investors expecting higher returns (Next 1 year higher then previous 1 year): 60% of investors
- Average investment loss before considering to sell: -11.3% losses before selling
- Will never sell declining assets unless necessary: 13% of investors
2) Investors on Private Assets
Top 6 Preferred Private Assets:
- Private Equity – 30%
- Real Estate – 24%
- Infrastructure & Renewable Energy – 23%
- Insurance-Linked Securities – 8%
- Microfinance – 5%
- Private Debt – 3%
Top 4 Reasons to Invest in Private Assets:
- High Returns – 56%
- Diversification – 51%
- Sustainability / Impact – 40%
- Lower Volatility – 33%
Top 6 Factors to Consider for Private Assets:
- Track Record – 61%
- Reputation & Brand – 60%
- Costs & Expenses – 55%
- Investment Strategy – 49%
- Fund Size – 31%
- Sustainability / Impact Credentials – 17%
Top 5 Barriers to Investing in Private Assets:
- Transparency – 65%
- Less Experience & Knowledge – 64%
- Less Liquid / Long Holding Period – 63%
- Costs & Expenses – 55%
- Large Minimum Investment Size – 37%
Target Holding Period of Private Assets:
- 1 Month – 7%
- 1 Year – 21%
- 1 to 5 Years – 44%
- 5 to 10 Years – 18%
- 10 to 20 Years – 5%
- Indefinitely – 3%
- Do not know – 3%
Investor Survey Insights:
- Average portfolio allocation to private assets – 16.4%
- Expert investors average portfolio allocation to private assets – 23.1%
- Think they can buy private assets through financial advisor – 46%
3) Investors on ESG & Sustainable Investment
Companies taking sustainable actions will help them generate long-term value:
- Agree – 83%
- Neutral – 14%
- Disagree – 3%
Top 6 Important Areas Asset Managers Should Engage:
- Climate (Eg. Net Zero) – 33%
- Natural Capital & Biodiversity (Eg. Deforestation) – 26%
- Human Capital Management (Eg. Health, Safety) – 20%
- Inclusion & Diversity – 8%
- Human Rights (Eg. Ethical Supply Chain) – 6%
- Governance (Eg. Shareholder’s rights) – 6%
Top 5 Companies Type Investors Prefer to Avoid:
- Companies with High Emissions – 49%
- Tobacco Producers – 42%
- Companies with Poor Workforce Practices – 36%
- Companies involved in Fossil Fuel Production – 33%
- Companies involved in Arms Supply / Production – 22%
Top 3 Reasons for Sustainable Investments:
- Environmental Impact – 55%
- Societal Principles – 42%
- High Returns – 34%
Investor Survey Insights:
- Active ownership – 95% heard of the term
- Understand meaning of active ownership – 81% think they know what it means
- Will increase allocation to sustainable assets with more education – 50% of investors
- Lack of data on sustainable investment – 54% of investors are holding back investment
Schroders Global Investor Study 2023
Schroders commissioned alan. agency and iResearch to conduct an independent online survey of more than 23,000 people who invest from 33 countries and territories around the globe, spanning Europe, Asia and the Americas. The survey was conducted online between May 26 and July 31 2023.
About Schroders
Schroders is a global investment management firm with £726.1 billion (846.1 billion; US$923.1 billion) assets under management, as at 30 June 2023. Schroders continues to deliver strong financial results in ever challenging market conditions, with a market capitalisation of circa £7 billion and over 6,100 employees across 38 locations. Established in 1804, the founding family remains a core shareholder, holding approximately 44% of Schroders shares. Schroders has benefited from a diverse business model by geography, asset class and client type. It offers innovative products and solutions across four core growing business areas: asset management, solutions, Schroders Capital (private assets) and wealth management. Clients include insurance companies, pension schemes, sovereign wealth funds, high net worth individuals and foundations. Schroders also manages assets for end clients as part of its relationships with distributors, financial advisers and online platforms. Schroders aims to provide excellent investment performance to clients through active management. It also channels capital into sustainable and durable businesses to accelerate positive change in the world. Schroders business philosophy is based on the belief that if we deliver for clients, we will deliver for our shareholders and other stakeholders. Further information about Schroders can be found at www.schroders.com.hk.
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