InvestmentsDec 13 2022

Two-thirds of UK investors prioritising short-term returns

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Two-thirds of UK investors prioritising short-term returns

Two-thirds of UK investors are willing to prioritise short-term gains from their investment portfolios, according to research.

Schroders’ Global Investor Study, released today (December 13), showed that three-quarters of investors in the UK feel forced to take more risk than they would like.

This is in comparison to 54 per cent of global investors who are focusing on short-term goals, reflecting the economic situation in the UK.

With inflation continuing to sit above 9 per cent, driven by soaring energy prices, rising interest rates have squeezed incomes in the UK, and an approaching recession is expected.

Despite this, UK investors are anticipating annual returns of 11.26 per cent over the next five years, 0.48 percentage points above their expectations in 2021.

There is a danger that investors’ optimism about future returns is based on their experience of recent yearsLesley-Ann Morgan, Schroders

Returns expectations across mainland Europe are lower than in the UK, with investors in France anticipating 9.2 per cent, and Italy 9.8 per cent over the same period.

Investors in Japan were the most gloomy, expecting returns of 8.19 per cent.

Over half of UK respondents (54 per cent) said they found actively managed funds more attractive, six percentage points higher than the global average.

In addition, 41 per cent said they are more likely to speak with a financial adviser. 

It is encouraging to see that investors recognise the value active management can provide in times of uncertaintyDoug Abbott, Schroders

Schroders surveyed 23,950 people who will be investing at least €10,000 (£8,600) between February 18 and April 7 this year.

Head of UK intermediary at Schroders, Doug Abbott, said the results of the study are an important insight into how the wider economic environment can have a direct impact on investor behaviour and psychology when it comes to making investment decisions. 

“It is encouraging however to see that investors recognise the value active management can provide in times of uncertainty.”

Lesley-Ann Morgan, head of multi-asset strategy at Schroders, said: “There is a danger that investors’ optimism about future returns is based on their experience of recent years, where inflation was in check and the cost of borrowing at record lows.”

We are now moving into a new and arguably far more challenging phase, she said.

“For some people, the phenomenon of rising rates and inflation is greatly disconcerting with the results of the Global Investor Study indicating that people of all types of investment experience are keen to seek the advice of experts to help them navigate these challenges.

“Indeed, it is times like these when the expertise and experience of active managers becomes increasingly crucial as investors look to control their investment risk and also diversify.”

sally.hickey@ft.com