GCC individual investors more focused on long-term growth than short

26/05/2016 05:53 AST

Natixis commissioned an independent survey of over 7000 individual investors globally, including 300 in the GCC, from the affluent to the high net worth. It found that: An average of real annual return (above inflation) of 10.8 per cent is the reported need of investors in the region, based on their understanding of their investment goals 70 per cent of investors in the region believe this is realistic over the long-term Nearly two-third of surveyed investors agree that index funds offer better diversification than other investments

“One of the key aspects to have come out of this year’s survey of individual investors in the GCC is that investors are slowly moving towards a more goal-orientated focus compared to previous years,” said Jean Michel Bourgoin, Executive Managing Director Natixis Global Asset Management in the Middle East and North Africa. “This trend is encouraging – even if investors still need to improve the analysis of their long term requirements – being goal-focused and ensuring robust financial planning are key if you want to build a more intelligent and reliable portfolio”.

Returns in 2015 On average, investors in the GCC reported a return of 5.3 per cent in 2015, compared to 5.8 per cent globally. Over half of the surveyed investors also revealed that they did not make any changes to their portfolio in the midst of global market volatility in January this year, a trend that is in line with individual investors globally.

However, 44 per cent of GCC investors say they did not know their annual return for 2015 compared to 29 per cent globally.

“Working with estimates may leave individual investors short on their long-term goals and priorities. While market volatility and lack of appropriate tools to closely monitor risk in their portfolios has caused individual investors in several regions to be uncertain with regards to their global return, the growing importance of retirement planning as a financial goal for regional investors makes it an important challenge going forward,” said Bourgoin. Retirement planning a key priority

79 per cent of surveyed investors felt that the responsibility of funding retirement is falling on their shoulders. However, investors are conflicted about this trend with nearly 20 per cent feeling optimistic, 18 per cent feeling resigned and 16 per cent feeling unprepared. On average, investors think they will around 56 per cent of their pre-retirement income to live in retirement. This is short of the 70-80 per cent usually recommended.

“Retirement is still an ill-defined and elusive goal in many markets, including here in the Middle East. But with more investors recognising the retirement responsibility shifting from governments to individuals, there is a greater degree of focus on adaptability of investment strategies to personal liabilities over the long-term,” Bourgoin said. “A diversified portfolio that balances active and passively managed strategies will help investors’ weather volatility, manage risks and reach their goals.”

Investors want personalised advice

Overall, 70 per cent of investors agree that investors who have a professional financial advisor are more likely to reach their financial goals than those who do not, and a further 74 per cent say professional advice is necessary to manage their investments and meet their retirement goals. However, the majority of investors (56 per cent) say making their own investment decisions is more important to them than outsourcing all investment decisions. “The relationship between advisors and investors must centre on more communication and capacity building. Investors in the region want a relationship that will make them smarter and better informed instead of simply leaving it up to the experts,” Bourgoin said.

CPI Financial