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Advisers key to overcoming investor bias

Australian investors need to speak to advisers to improve their strategies and stock options if they are to maximise returns, according to the investment management firm Franklin Templeton.

In the group's Global Investor Sentiment Survey, Franklin Templeton found that only 6 percent said they would allocate “significantly more” to growth-type investments and only a small minority of respondents saw the best opportunities in emerging and frontier markets.

This, the firm points out, could mean that investors miss out on key opportunities.

“Investors may not be aware of the investment opportunities that exist globally across a range of sectors and may benefit from discussing with their financial adviser how these opportunities might complement their Australian exposure as global markets continue to stabilise,” said Maria Wilton, managing director at Franklin Templeton Investments Australia.

When asked where they see the best equity opportunities this year, 54 percent of investors surveyed said they expect Australia to offer the best returns while 30 percent said that Asia would.

This sentiment continues going forward in the decade, with investors still expecting better home returns.

“The results show a clear bias for investors to keep their assets on home soil,” Wilton stated.

The asset managers also found that many investors are still taking a very conservative approach, which Templeton points out has its own dangers.

“Trying to avoid short-term risk and volatility entirely may expose investors to other kinds of risks, such as inflation and the impact of rising interest rates,” Wylie Tollette, director of performance analysis and investment risk for the firm pointed out.

Templeton admits these dangers exist; however, the company believes that having the correct strategic financial advice can allow investors to get better returns.

“These survey results underscore the importance of investor education, especially among investors who have not experienced as many market cycles and whose attitudes may be especially influenced by more recent market volatility,” Wilton said.