The Schroders Global Investment Trends Survey 2015: Over-confidence amongst retail investors globally with majority expecting a return of 9% over the next year

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Over two fifths (44%) of retail investors in Canada feel more confident about investment opportunities in the next 12 months than they did a year ago, according to the Schroders Global Investment Trends Survey 2015. In addition, almost nine in ten (89%) Canadian investors expect to see their investments grow over the next 12 months. Retail investors are expecting a strong average return of 9% over this period, despite planning to allocate 44% of their portfolio to low risk asset classes, such as cash.
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Increased appetite for investments

The study, commissioned by Schroders amongst over 20,000 retail investors in 28 countries including 1,000 in Canada, shows an increasing appetite for financial investments compared to previous years. Of those surveyed, two thirds (66%) intend to increase or maintain the amount they invest in the year ahead, with 44% planning to increase their investment. This demonstrates a greater investment appetite within Canada than elsewhere in the world, where just half (50%) of those questioned intend to maintain or increase their investment this year. On average, Canadian investors plan to increase the amount they save or invest by 6.2% over the next year. Overall, 84% of investors in Canada are looking to generate an income from their investments.

Disconnect between expected returns and attitude to risk

Almost nine in ten (86%) retail investors said they made a profit from their investments in the past 12 months, with average gains of 8%, which was consistent with the results seen globally, where 88% made a profit of approximately 10%.

However, despite the high levels of confidence being reported this year and optimistic expectations of strong returns in the next 12 months, the Schroders survey reveals a significant disconnect between expected returns and the appetite that investors have for risk, with many favouring lower risk investments.

Typically, retail investors in Canada are looking to place only around 19% of their investment portfolio in higher risk / higher return assets such as equities, with 44% of investors’ funds going to low risk / low return assets such as cash and around a third (37%) being placed in medium risk assets such as bonds.

Despite this disconnect, over a quarter (26%) of Canadian retail investors polled will change their strategy by seeking professional financial advice, with almost a third (32%) intending to invest as they have done in previous years and over a third (36%) planning to change their investments in response to current market conditions.

Massimo Tosato, Executive Vice Chairman, Schroders plc said: “It’s overwhelmingly clear that the demand for income is prevalent as retail investors seek to meet various objectives such as financing their children’s education, purchasing a first home, setting up new businesses, or supplementing their existing income in retirement. The necessity and challenge to generate income from investments is strong, particularly given the global low interest rate environment.

“However, our survey highlights a clear disconnect globally between retail investors’ return expectations and their attitudes to risk. Expecting significant returns within the next 12 months, while only placing less than a fifth (19%) of their investment portfolio in higher risk assets suggests that investors are not taking a realistic approach to investing. It’s imperative that investors shape their portfolios to balance the risk profile with the returns they are seeking, and in most cases, that will require a level of professional advice.”

Thirst for income

Globally Asian, UAE, South American and South African retail investors are the most focused on income investing, with more than 90% of each planning to do so, compared to more than 80% of North American, Australian and European investors. Interestingly, less UK investors (70%) plan to invest in assets to generate a regular income. Canadian investors are typically accessing income through direct equities (17%), multi-asset funds (13%) or equity funds (10%).

Massimo Tosato concludes, “Retail investors around the world are considering income investing because of low bond and bank interest rates and the long-term and stable opportunities typically associated with dividend paying companies. They recognise the value of re-investment and portfolio growth as a cornerstone of income investing. It is also essential that retail investors diversify their investments across regions and asset classes.”

Explore the global findings at www.schroders.com/GlobalInvestmentTrends

(Please note that this link goes to the page of our UK-based affiliate that conducted the survey. The link is not intended as an offer or solicitation by that affiliate of any service or product.)

For further information, please contact:

Jennifer Manser O’Rourke Jennifer.manser@schroders.com +1 212 632-2947

Melanie Blanco mblanco@jcprinc.com +1 646-922-7774

Schroders commissioned Research Plus Ltd to conduct an independent survey of 20,706 retail investors in 28 countries around the world who intend to invest at least €10,000 (or the equivalent) during the next 12 months. The survey was conducted online between 3rd – 27th March 2015 and these individuals represent the views of investors in each country involved in the survey.

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for accounting, legal or tax advice, or investment recommendations. The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee that any forecast or opinions will be realized.

About Schroder Investment Management North America Inc.

Schroder Investment Management North America Inc. is a unit of Schroders plc (SDR.L), a global asset management company with approximately $474.3 billion under management as of March 31, 2015. Schroder’s clients include major financial institutions including banks and insurance companies, as well as local and public authorities, public and private pension funds, endowments and foundations, intermediaries and advisors, as well as high net worth individuals and retail investors. The firm has built one of the largest networks of offices of any dedicated asset management company with more than 400 portfolio managers and analysts covering the world’s investment markets, offering a comprehensive range of products and services.

Schroder Investment Management North America Inc. is an investment advisor registered with the U.S. SEC. It provides asset management products and services to clients in the U.S. and Canada including Schroder Capital Funds (Delaware), Schroder Series Trust and Schroder Global Series Trust, investment companies registered with the SEC (the “Schroder Funds”). Shares of the Schroder Funds are distributed by Schroder Fund Advisors LLC, a member FINRA. Schroder Investment Management North America Inc. and Schroder Fund Advisors LLC are indirect, wholly-owned subsidiaries of Schroders plc, a UK public company with shares listed on the London Stock Exchange. Schroder Investment Management North America Inc. is an indirect wholly owned subsidiary of Schroders plc and is a SEC registered investment adviser and registered in Canada in the capacity of Portfolio Manager with the Securities Commission in Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec, and Saskatchewan providing asset management products and services to clients in Canada.