(1888PressRelease)
June 17, 2009 - Based on the findings of a global survey of 2,100 affluent and wealthy investors with investable assets ranging from £ 500,000 to £30 m the report aims to examine how high-net worth investors are responding to the current market environment and to look how emotional factors can affect the investment process.
• Globally 90% of HNIs see opportunity to invest in current market, but only a few willing to increase risk in their portfolio
• Fear of uncertaintyis preventing most HNIs and UHNIs to make the best of this opportunity, most still prefer to have status quo on their asset allocation
• Domestic equity is a definite consideration over a medium term for most Indian HNIs
• Heath care/ Pharma; Consumer goods and Energy and natural resources have emerged as the most preferred sectors for equity investment for Indian HNIs in the next 12 months
Perception on recovery
The latest report from Barclays Wealth reveals that around 45% of respondents from Hong Kong/China expect improvement in China’s economic performance over the next 12 months whereas only 22% of respondents from India are confident of better economic growth In India. Investors in UK (45.7%), US (25.2%) and China (28.7%) are more confident on growth in Indian economy then Indian HNIs back home. Middle East (38.7%) and U.S. (30.6%) are the only other regions where respondents are bullish on a better economic performance in the next 12 months. In India too this perception should have fairly improved with the new government in office. , “As the new government settles down and the expected reforms are carried forward, HNI’s in India would feel more confident on the positive prospects of the Indian economy. Given the record low interest rates in most part of developed world and liquidity, India could attract significant investments.” Says Satya Bansal, Chief Executive, Barclays Wealth, India.
Fear of uncertainty has resulted in status quo approach to investing, even where they see opportunity
Fear is preventing the wealthy from investing, even where they see opportunity; hence investors are sticking with the status quo and simple and familiar investment options. Almost 90% of the HNIs globally questioned for this report says the current environment offers buying opportunities but only 28% of them say that they would increase the level of risk in their portfolio. Among the Indian HNIs, while 80% see this as an opportunity, only 16% are willing to increase the risk in their portfolio. Only 19% of the respondents from India were looking at increasing their willingness to make higher risk investments over the next 12 months compared to 27% from Hong Kong and UAE. There is a broad disconnect between the investor perception to recovery and their action about it. “For an investor with a reasonable investment horizon, it could be a good time to add risk at portfolio level” adds Satya Bansal.
58% of HNIs globally say that they will not make any changes to their current asset allocation. Behavioural finance experts believes that, as many investor find it very difficult to distinguish between a genuine turn in the market and a short term bear rally, they tend to stick with the status quo.
In the current environment respondents are more comfortable with increasing their exposure in straight and simple assets like real estate, cash, bonds and domestic equities as globally a majority (58%) of them says they will invest in what they know.
Asset allocation and sector preferences
The survey reveals Real Estate; Government Bonds; Commodities; Domestic stocks and cash are the assets where globally investors are looking at a greater allocation. Nearly 45% of respondents from India feel that prices of real estate may slightly increase and a similar percent feel it would remain stable for the next 24 months. UAE investors seem to be more optimistic of recovery in real estate with nearly 55% of them feel there would be slight increase in property prices over next 2 years.
The survey also reveals the long term faith in the equity markets and investor’s preference of equity investments in Heath care/ Pharma; Consumer goods and Energy and natural resources in the next 12 months. “With the recent rally across the board, the investors’ action is likely to be more sectors specific” adds Satya Bansal .
Interestingly the report reveals that far more Indian HNI’s believe in individual stock picking than their counter parts in other regions. Nearly 66% respondents from India said best equity returns can be generated by picking individual stocks followed by 53% investors from UK and UAE, 49.6% from Asia (excluding India) and 41.7% from Hong Kong.
Criteria to select the fund manager
Transparency and quality of information are becoming watchwords for wealthy investors. Due diligence is rising up the priority list for many high-net worth individuals, with almost half of respondents intend to increase the amount of time that they spend selecting specific investments. There is a change in preferences that has been exhibited by Indian investors while choosing a fund manager. A year ago, the top criteria for selection was reputation of the firm and performance fees. The criteria now have changed to financial stability of the provider and the quality and transparency of investor information.
Notes to editors:
A delicate balance: opportunity and caution in uncertain times’ is the ninth report of an influential series launched in December 2006. Written by the Economist Intelligence Unit on behalf of Barclays Wealth, this ninth volume of Barclays Wealth Insights examines the investor behaviour responding to the current market environment.
Methodology
Written by the Economist Intelligence Unit and commissioned by Barclays Wealth, this ninth volume of Barclays Wealth Insights looks at the responses of high-net worth individuals to the current market environment, with a particular focus on investor behaviour.
It is based on two main strands of research. First, the Economist Intelligence Unit conducted a survey of more than 2,100 high-net worth individuals, with investable assets ranging from £500,000 to in excess of £30 million. Respondents were spread globally, with the highest numbers of respondents from the United States, Hong Kong, India, Singapore, Canada, Spain, Switzerland, the United Arab Emirates, the United Kingdom and Monaco. The survey took place between March and May 2009.
Second, the Economist Intelligence Unit conducted a series of interviews with economists, senior executives and wealth experts from around the world.
Log onto www.barclayswealth.com to access the Barclays Wealth Insights series.
To arrange an interview or for further media information:
Barclays Wealth
Nicola Hankey
020 7114 9813 / 07775 548418
nicola.hankey ( @ ) barclays dot com
Ogilvy PR
Ashwin Shetty
022 443454147 / 9967024293
aswhin.shetty ( @ ) ogilvy dot com
Priyanka Shastri
022 443454503 / 9920622460
priyanka.shastri ( @ ) ogilvy dot com
About Barclays Wealth
Barclays Wealth, the UK's leading wealth manager by client assets, has £145 client assets globally, at 31 December 2008. It serves affluent, high net worth and intermediary clients worldwide, providing international and private banking, fiduciary services, investment management and brokerage. Thomas L. Kalaris is the Chief Executive of Barclays Wealth and he joined the business at the start of 2006. It was voted Global Investor’s Wealth Manager of the Year for 2007.
Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services with an extensive international presence in Europe, the USA, Africa and Asia.
With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs over 155,000 people. Barclays moves, lends, invests and protects money for over 48 million customers worldwide.
For further information about Barclays Wealth, please visit our website www.barclayswealth.com.
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