UKSPA survey reveals investors' low expectations for markets
30th October 2019
- Two-thirds of investors hold a negative or flat view of markets in the short term -
- 58% of investors are still likely to invest in developed market indices, the most popular being the FTSE 100 (90%) -
- Yet investors seek investment products that offer full or partial capital protection to mitigate perceived market risk -
Almost two-thirds (64%) of investors are negative or neutral on the short-term market outlook for the FTSE 100 index, and just over half (51%) are negative or neutral over the medium term, fresh research reveals.
Most investors (70%) have a negative or neutral perception on the short-term outlook for the S&P 500, and for the Euro Stoxx 50 (77%), according to market research conducted by the UK Structured Product Association ("UKSPA”). Over the medium term, 59% held a negative or neutral view of the S&P 500 and 66% felt negative or flat on the outlook for the Euro Stoxx.
Scepticism over the future performance of markets is reflected in product preferences with half of the ‘mass retail’ investor segmentseeking low-risk products that offer full capital protection and a third (33%) of ‘sophisticated’ investorswanting the same. The number of sophisticated investors seeking full protection has increased, up from 30% in 2017 to 33% in 2019.
Just under a third (30%) of all investor types say their ideal portfolio would hold products that put some capital at risk, while 18% are willing to put all capital at risk if it secured a higher potential return.
There has also been an increase in the number of investors seeking products that can offer positive returns when market growth is negative, with 78% of all investors expressing interest in such features, up from 75% who said the same in 2017.
Zak de Mariveles, chairman of the UK Structured Products Association, commented:"Our survey shows that while there are some significant differences between demographics and their investment preferences, there are also striking similarities. In a world of lower returns, the survey shows most investors are sceptical on the outlook for the main market indices but still want to beat cash whilst protecting on the downside. There is a clear need for products that can continue to deliver positive returns in flat markets.
"Once invested, a large proportion of investors are happy to leave their money entirely alone for the duration of the investment, and happily a significant proportion of investors are willing to invest over longer-time frames, understanding that putting money to work in markets over many years, rather than months, is the only way to reap the best returns.”
There has been an increase in the number of people holding investments over the last two years, with 41% of those surveyed having actively invested over the last two years – up from 35% in 2017. The proportion of people with no investments who are unlikely to invest over the next two years has fallen from 36% in 2017 to 29% in 2019.
-Investors are most likely to invest managed funds (76%), developed market shares (72%) developed market equity indices (58%).
-The FTSE 100 is the most popular with 90% of investors ‘very likely’ or ‘somewhat likely’ to invest in it. 79% are likely to invest in the S&P 500 and 72% in the Euro Stoxx index.
-Nearly half (47%) of investors are willing to put their cash to work by investing for up to a decade, with 23% prepared to invest for more than 10 years.
-A third of sophisticated investors (32%) are willing to invest over the long-term (10+ years), while the majority of the mass retail segment (62%) prefer to invest in the short term (0-5 years).
-Once invested 45% of all investors would be happy to leave their money invested for the full life of an investment, 30% would be happy with limited access and just 25% would require full access to their funds.
Interest in structured products specifically has also grown, with 23% of investors stating that they have held or currently hold these products in their portfolios (up from 20% in 2017).
Among the reasons for investing amongst the mass retail segment, most do so to outperform cash (42%), to preserve capital (34%) and to save for a major purchase (26%). Whilst among sophisticated investors, 70% invested to outperform cash, 62% to preserve capital and 36% invest for the benefit of children or grandchildren.
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Notes to editors:
UKSPA commissions market research on a regular basis, both to receive interesting insights into current investment preferences and perceptions, as well as to help its members build a detailed insight into investors’ thinking, and to design investment products that match their needs.
Online fieldwork was conducted on behalf of UKSPA by Harris Interactive in the UK in Q2 2019. There were 2027 respondents composed of mass retail (657) educated and informed (933) sophisticated investors (437).All respondents were aged 18+; a financial decision maker; did not work in market research or marketing; currently hold investment products or are likely to in the next 2 years; have investable assets of at least £5,000.
UK Structured Products Association
TheUK Structured Products Association ("UKSPA”)is an organisation established in 2009 by the leading manufacturers of structured products in the UK with the aim of providing a central voice for the industry. It currently has 17 members.
Its role involves engaging with regulators to ensure transparency and consistency, developing best practice guidelines, educating the investment community and providing a source of information on structured products for manufacturers, financial advisers and retail investors within the UK.
Current UK SPA members:Citi; Cirdan Capital; Credit Suisse; Deutsche Bank; Hilbert Investment Solutions; HSBC; Investec; J.P.Morgan; Mariana; Meteor; Morgan Stanley; Natixis; RBC Capital Markets; Société Générale; Tempo Structured Products; Walker Crips; WisdomTree.
Zak de Mariveles
Founder and Chairman of the UK Structured Products Association (UKSPA), Zak takes an active role with regulators, major investment banks and UK advisory firms in the development of the UK structured product market.
He has held roles with Gerrard Vivian Grey, BZW and Barclays Capital, spending 13 years at the latter with responsibility for the sales of structured products within the UK. He joined RBS in January 2007 as Managing Director, Head of UK IFA & Listed Products Sales, Markets and International before joining Société Générale Corporate & Investment Banking in 2013 in a newly created role as Head of UK IFA and exchange traded sales in the bank’s Global Markets business, leaving in 2019 to take up a permanent role as the chairman of the UKSPA.
The ‘Mass retail’ segment had average investable assets of £50,000 with the majority either investing ‘for necessity’ or considered themselves somewhat knowledgeable but not an expert in personal finance.