Against the backdrop of recent market volatility, over ninety per cent of active mutual fund investors plan to maintain or increase their allocations to active funds over the next twelve months, according to a new survey AMG Funds.
The survey polled approximately 1,000 affluent individual investors with over USD250,000 in household investable assets, on their forward expectations regarding equity markets and the macroeconomic environment, as well as their mindset and behaviours around investing.
The survey found that while virtually all respondents anticipate moderate to very high volatility over the next 12 months, nearly half (43 per cent) of the investors are optimistic about improvements in the macro economy. These affluent investors also foresee fundamental changes in the economy, with the majority of respondents expecting a rise in interest rates (64 per cent) and the rate of inflation (59 per cent).
According to the survey, wealth preservation ranks as investors’ top investment goal (28 per cent), followed by a near tie among diversification (23 per cent), income generation (23 per cent) and growth maximisation (22 per cent). Some 58 per cent of affluent investors say large swings in the stock market make them very uncomfortable, and nearly half (48 per cent) believe that portfolio volatility cannot be reduced without compromising growth.
While more than half (55 per cent) of respondents believe their portfolio is adequately diversified, 49 per cent believe that a portfolio is adequately diversified as long as it is invested across a broad range of stocks.
In addition, a total of 48 per cent of respondents say they need investment advice more today than they did in the past, and 42 per cent are willing to pay more for oversight of their investments.
“The findings of our study have implications for both clients and their financial advisors. While many affluent investors are optimistic about the forward trajectory of the economy, most respondents agree that ongoing market volatility will continue to impact their portfolios – and they may underestimate the investment returns required to meet their long-term objectives in such a market environment,” says Jeffrey Cerutti (pictured), CEO of AMG Funds. “Given affluent investors’ defined investment goals of wealth preservation, diversification, income generation and growth maximisation, our study suggests that there is a meaningful opportunity to provide more guidance and education to this client base about effective investing during uneven markets, including the benefits of active management and alternative investments within a diversified portfolio.”