Australian investors’ reduced desire to invest in domestic equities has increased their sensitivity to geopolitical risk, which research firm Investment Trends says poses challenges for financial advisers.
Investment Trends’ 2017 Adviser Product and Marketing Needs Report found Australian investors’ net intention to increase domestic equities exposure has “waned in recent years” to its lowest point in any 12-month period since Investment Trends’ records began in 2011.
Desire to increase exposure to international equities has varied greatly throughout the same period, the research found, as geopolitical events such as Brexit in the UK and Donald Trump’s successful presidential election have generated “increasingly wide swings” between wanting and not wanting to invest.
“Clients are more aware of geopolitical events than ever before, and this is affecting their investment sentiment,” said Investment Trends research director Recep Peker.
“As a result, planners increasingly seek proactive content to aid in reassuring clients, aligning expectations and keeping them on track with their financial goals.”
The research also found investor’s returns expectations for Australian equities remain “decoupled from market performance”, with many investors' 12-month capital gains expectations sitting between 1 and 5 per cent despite “healthy gains” enjoyed by the market in the last two years.
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