Certitude Global Investing Intentions Index Report shows advised-investors are more stable in their global investing intentions
Results from February’s Certitude Global Investing Intentions Index (CGIII) Report indicate that advised investors are more bullish in their intentions to invest offshore and they also hold much more stable views towards global investments than their non-advised counterparts.
The Report, produced each month by Investment Trends, collates the views of over 700 actively engaged leading investors and measures their net demand for global investments.
The latest CGIII Report reveals that non-advised investors’ net demand for international assets went from a high of 187 in November to a current low of 131 in just three months. Meanwhile, the intentions of advised investors remain stable by comparison, sitting at 167 in February.
This month, overall net demand for global investments decreased fifteen per cent to 154 from its peak in January. Despite the decrease, a large proportion of Australian investors still recognised a need to increase their global diversification with 39% agreeing that they need more international investments in their portfolio.
Global equities is by far the most popular asset class to obtain this exposure – 81% of investors who intend to invest overseas are interested in global equities when allocating offshore. By comparison, international property increased in popularity this month and is the second most popular asset class with those planning to invest globally, sitting at 17% (up from 9%).
Craig Mowll, CEO of Certitude Global Investments, said: “In January, investors signalled a very strong interest in investing globally when net-demand reached a peak. An interesting finding we saw in February is that the proportion of investors currently holding shares in overseas companies has increased significantly (37%, up 16% pts from January), which may be a reflection of last month’s intention turning to action.
“This month’s results also highlight a trend we’ve seen that investors with a financial adviser have steadier intentions when it comes to investing overseas than non-advised investors. This may suggest that advised clients are making more long-term considered decisions rather than having ‘knee-jerk’ reactions to market movements.”
Barriers to global investing
Behind the decrease in the Index are investors’ most commonly cited barriers to investing offshore – exchange rate volatility was cited as a concern for 23% of investors along with market volatility (21%) and lack of knowledge (21%). Since the inception of the CGIII Report (May 2013), these three barriers have consistently been the most frequently named by investors.
Mr Mowll commented, “The anecdotal comments we got from investors in this month’s Report corroborate these results. Investors name fears like loss of capital, uncertain markets and conflicting forecasts for market performance. It’s unsurprising then that advisor lead investors feel more positively about global investment opportunities than others and remain more stable in their intentions – they have the benefit of an advisers’ insight and experience of market cycles to manage volatile times. They are therefore more likely to stay the course of exploring the diversifications benefits from investing globally.”
USA remains top region, but decreasing its lead
Of the top three regions investors plan to increase exposure to, both the US/North America and Asia declined in popularity while international funds covering multiple regions remained steady. The US/North America is a perennial top choice region for investors looking to allocate offshore; this month 43% of those planning to invest overseas say US/North America is of interest, down from 52%in January. Asia too, which has consistently been among the top three, fell by 10 % pts to 18%.
Meanwhile appetite for international funds covering multiple regions remains strong, with 28% of investors considering such funds to gain broad global exposure. Mr Mowll commented that investors may be attuned to recent chatter of a downturn in Asian markets.
February CGIII – Key Findings
- Net demand for international assets decreased in February by 15% – the Certitude Global Investing Intentions Index sits at 154, down from a peak of 182 in January.
- 39% of investors believe they need more international assets in their portfolios.
- Equities remains a strongly preferred asset class for those looking to invest offshore – 81% name it as the asset class they are interested in. Property appeals to 17% of investors looking offshore.
- The three most commonly cited barriers to investing internationally are exchange rate volatility (23%), market volatility (21%) and lack of knowledge (21%).
- While US/North America remains the most popular regions with those looking to allocate offshore, it decreased 9% pts to 43% in February. Similarly, Asia remains in the top three but has decreased in popularity to 18%, down from 27% last month. Interest in international funds covering multiple regions has remained fairly steady with 27% preferring such funds when investing globally.