Investors globally are focused on allocating funds that meet their personal needs and principles, the Schroders Global Investor Study 2022 has found.
Schroders’ flagship study, which surveyed nearly 24,000 individuals who invest from 33 locations globally, including Indonesia, Malaysia, Singapore and Thailand, revealed that younger investors in Malaysia aged 18-37 (78% versus 71% in Southeast Asia and 63% globally) strongly prioritise their principles and values when making investment decisions. On the global level, investors aged 71 and above took the lead, with 76% placing more priority on these aspects, compared to 66% in Southeast Asia.
Furthermore, 68% of younger investors aged 18-37 in Malaysia (versus 70% in Southeast Asia and 60% globally) also feel more empowered to influence corporate decision-making through their investments compared to Malaysia investors belonging to other age brackets.
Results also showed that 51% of these ‘expert’ investors in Malaysia (versus 58% in Southeast Asia and 55% globally) stated that their personal principles are ‘very important’ to them – significantly higher than those who class themselves as having an intermediate level of investment knowledge (17% versus 21% in Southeast Asia and 16% globally) and those in the ‘rudimentary’ category (16% versus 15% in Southeast Asia and 10% globally).
Malaysian investors also feel overwhelmingly that, as shareholders, they should have the power to influence the companies they are invested in. This applies across the investment knowledge spectrum, from those who class themselves as having a ‘beginner’ level of investment knowledge through to the ‘experts’. A formidable 97% (versus 92% in Southeast Asia and 95% globally) of ‘expert/advanced’ investors in Malaysia believe they should be empowered to do so.
Climate issues are seen as the most important engagement priorities in most countries in Southeast Asia, in line with most other countries surveyed (31% versus 32% globally). Natural capital and biodiversity (both 23% in Southeast Asia and globally) also ranked second in Southeast Asia, demonstrating the significance of environment-related issues.
Knowledge is power
However, despite the positive intentions, a gap remains in investors who feel genuinely empowered to make the right investment decisions for their future. Some 82% of ‘expert/advanced’ investors in Malaysia (versus 84% in Southeast Asia and 82% globally) feel they have sufficient knowledge to feel confident in making investment decisions for their financial future. In comparison, less than half (39% versus 47% in Southeast Asia and 26% globally) of ‘beginner/rudimentary’ investors’ in the country feel knowledgeable enough to do so.
Investors in Southeast Asia also see financial providers (61% versus 51% globally) as the ones responsible for ensuring that people have sufficient levels of knowledge on personal financial matters. Close to half of Southeast Asian investors also believe that independent financial advisers, governments and regulators, and educational institutions have a role to play in this regard.
Greater knowledge also driving private asset focus among retail investors
Furthermore, the study revealed Malaysia now feel more confident in accessing investments that might previously have been seen as off-limits. A particular example of this comes in private assets, with around half of the investors surveyed feel empowered to access both digital assets (49% versus 51% in Southeast Asia and 47% globally) and private equity (45% versus 49% in Southeast Asia and 47% globally). Meanwhile, 54% of Southeast Asian investors (versus 50% in Southeast Asia and 45% globally) are confident in investing in real estate.
However, while most people feel empowered to invest in private assets, some asset classes are still perceived as complex, requiring additional support from financial providers and advisers in order to access them. This is particularly the case for infrastructure where Southeast Asian investors were more likely to invest through a third-party product such as a mutual fund (44% versus 41% globally) rather than directly (37% versus 37% globally).
Democratisation of private assets may be linked to financial literacy
In short, the greater the level of perceived investment knowledge, the more likely people are to be interested in investing in private asset classes. For example, one third of Southeast Asian ‘beginners’ (34% versus 33% globally) feel infrastructure is beyond their grasp compared with 9% (versus 11% globally) of ‘expert’ investors. This suggests the trend towards the democratisation of private assets is likely to be linked to greater levels of financial literacy.
Stuart Podmore, Schroders’ Investment Propositions Director, commented: “This Study demonstrates that perhaps now more than ever before, investors of all levels of experience are increasingly wanting to express their views if companies are unable to justify their actions. If the pandemic has taught us nothing else, it is that companies, as well as governments, are under closer scrutiny than ever to mitigate environmental, societal and governance risks in a sustainable way. What’s so interesting about our survey this year is that societal and governance risks are starting to rise up the list of priorities for investors.
“Increased investment knowledge appears to support people’s confidence in supporting corporate decision-making. As an active asset manager and guardian of our clients’ assets, we are committed to engaging in year-round dialogue on their behalf, to support better investment outcomes.”
Sheila Nicoll, Schroders’ Head of Public Policy, stated:“This year’s results reinforce the increased need to support people in informing themselves about investment, and engaging in their finances. This needs to be from earliest schooldays, throughout the education system, and during the course of changing circumstances in life. At Schroders, it is our priority to support our clients in finding the best investment solutions which meet their needs while ensuring they have all the right tools to make their decisions.”
Georg Wunderlin, Global Head of Private Assets, Schroders Capital, commented: “Schroders Capital, our private assets business, is well placed to support the ‘democratisation’ of private assets. We’re seeing increasing interest from individual investors to build a holistic portfolio comprising private and public investments, as evidenced by our Global Investor Study. Our teams are able to offer private investors access to this world through a range of specialist private asset vehicles and blended solutions which encompass both private and public assets.
“Next to diversification benefits, blended portfolios allow individual investors to overcome the illiquidity barrier which has prevented them from investing in private markets at larger scale. We will continue to innovate to help individual investors and private banks access to most attractive areas of private markets.”
For more information about the Global Investor Study 2022, visit the website here.
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