
In the current uncertain investment climate, local investors are less likely to go it alone and prefer to seek expert advice. They also expect to generate higher returns over the next five years. According to the Schroders Global Investor Study 2022, the majority of investors, whatever their level of experience, will seek the help of a financial advisor or rely on the advice of fund managers. More than 23,000 investors at 33 locations worldwide were surveyed for the study, including 400 South Africans. The majority of participants have an intermediate level of investment knowledge on a spectrum ranging from beginner to expert. That…
In the current uncertain investment climate, local investors are less likely to go it alone and prefer to seek expert advice. They also expect to generate higher returns over the next five years.
According to the Schroders Global Investor Study 2022, the majority of investors, regardless of their level of experience, will seek the help of a financial advisor or rely on the advice of fund managers. More than 23,000 investors at 33 locations worldwide were surveyed for the study, including 400 South Africans. The majority of participants have an intermediate level of investment knowledge on a spectrum ranging from beginner to expert.
The largest proportion (20%) of South African investors expect to achieve returns of between 20% and 25% over the next five years, although the same percentage of respondents said they have achieved total returns of between 15% and 19% on average over the past five years , indicating a “very optimistic outlook from South African investors compared to their global peers,” said Kondi Nkosi, Country Head at Schroders South Africa.
He says this can be attributed to the expected above-average performance of the country’s domestic market in 2021.
“In the context of growing global instability, as well as the political changes underway in South Africa, this position may change or may very well shape the inherently positive mindset of South African investors for 2023.”
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Contact financial advisors for advice
The study also shows that even the most knowledgeable investors in South Africa are turning to financial advisers to help them navigate the prevailing uncertainty, with 44% of novice or rudimentary investors saying they would rather seek advice from a financial adviser and 50% of advanced investors and 43% of expert or advanced investors surveyed claim the same.
Similarly, 47% of respondents said they find either actively or passively managed funds more attractive than they did six months ago, and Nkosi says this is a clear indicator of a concomitant increase in uncertainty about how to navigate this unexplored space for many investors Terrain is coping with a growing reliance on the expertise of financial advisors.
“We must recognize the unique and unprecedented position South African investors find themselves in: caught in a climate of geopolitical instability and a local landscape undergoing historic transformation. Going forward, the role of financial advisors will become even more important in helping South Africans make clear, informed decisions that bring long-term benefits.”
The study also paid special attention to how local investors react to global economic phenomena such as interest rate hikes 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 results were particularly compelling: 43% of respondents said they had changed their investment strategy due to rising inflation, and 42% said they intended to do so do and only 14% said they do not want to make any significant changes to their portfolio.
South African investors also said they have plans to respond to rising interest rates, with 66% saying saving more and spending less is top of their list of priorities, followed by 57% who favor investing in cryptocurrencies like Bitcoin and Ethereum firm, and 55% prefer paying off debt faster to save on interest.
As such, the top asset types that have lost appeal over the past six months have been government bonds and cash or cash equivalents, which are vulnerable to rising interest rates.
The study also showed that half of South African investors will feel compelled to take more risk to meet their return expectations in the years to come, while 27% said they made investment decisions under pressure that they later regret.
“These results once again underscore the need for South Africans to seek expert advice on an increasingly complex investment landscape, particularly in South Africa, where 53% of investors believe that the performance of their investments has a direct impact on their mental health -be -be .”