Risk tolerance grows among Asian investors

23 May 2014   Category: News, Asia, Global, Hong Kong, Japan, Singapore   By Derek Au

A survey has revealed that most investors in key Asian markets are willing to endure higher levels of risk compared to previous years, and increasingly see asset growth as a priority over protecting capital.

The research, conducted by Natixis Global Asset Management in March, also showed that most investors were more interested in their own financial goals when it came to performance, as opposed to the market benchmarks, which most asset managers rely on as a measure of success.

The survey covered 950 individual investors, each with a minimum invested asset net worth of US$200,000, across Hong Kong, Singapore and Japan. The report looked into investor attitudes towards portfolio construction, risk, and advice, among other criteria.

The results showed that Hong Kong investors were more risk tolerant than their global counterparts, with 61% willing to bear higher levels of risk than in recent years, compared to 50% worldwide. The proportion of Japanese investors who said they would endure higher risk nearly doubled to 55%, the survey found.

Although 73% of Singapore investors said they were conflicted between obtaining returns and preserving capital, 80% of them viewed asset growth as increasingly a priority over protecting capital, much higher than the global average of 67%. The proportions of Hong Kong and Japanese investors with a similar philosophy were 78% and 53%, respectively.

The survey found that most investors in these markets did not place much faith in benchmarking. For example, 85% of Singapore investors said that they were satisfied if they achieve their own financial goals, even if they underperform the market, while 73% of Hong Kong investors and 62% of Japanese investors said likewise, compared to the global average of 76%. The proportion of Singapore investors willing to set a target return, independent of market returns, was 76%, compared to 67% globally.

Madeline Ho, managing director, head of wholesale fund distribution, Asia-Pacific, Natixis Global Asset Management, said: “This is a clear call to asset managers to embrace a new way of thinking for their investors, to move towards personal benchmarking, and this trend is very healthy. It shows investors are thinking in a more sophisticated and practical way about their financial goals and approach to investment. ”

The survey found that use of financial advisors had increased globally to 63% from 53% last year. In Asia, 67% of Singapore investors said that they occasionally use a financial advisor, while this figure in Japan rose sharply to 38% from a low of 14% last year. In Hong Kong, this number fell to 53%.