Investors wise to diversification benefits
Retail investors understand the importance of diversifiying their portfolios but are unsure of how to go about it, says Investment Trends.
Eighty-four per cent of investors believe it is important to be diversified across different asset classes, according to the Investment Trends 2017 Investor Product Needs Report.
The report, which was based on a large-scale survey of 6,182 investors throughout 2017, also discovered that 40 per cent of investors found it difficult to access certain investments.
Investment Trends senior analyst King Loong Choi said, "Investors understand the need for a diversified portfolio, but they feel that achieving this outcome is not always easy. Product providers that best assist investors with their desire for diversification will stand out.
"Right now, international shares is the largest gap, followed by private equity funds, private business/venture capital and commercial property."
Investor interest in managed funds is growing as well, with the proportion of investors who intend to invest in one over the next 12 months doubling since 2013 to 13 per cent.
"Growing interest in managed funds is buoyed by investors’ desire for diversification across asset classes, the perceived ease of not having to select individual stocks and the access to a range of investment strategies that managed funds provide," said Mr Choi.
More than half of potential managed fund investors (55 per cent) say they would rather invest directly with the fund manager, through their online broker or the ASX mFunds service, according to the report.
"Fund managers have a golden opportunity to meet this growing demand by facilitating easier access to their product suite," said Mr Choi.
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