Australia's wealthiest investors: new report gives the who, the what - and the 'where now'
May 20, 2010
With market volatility again taking hold of the global financial scene, the release of the inaugural Investment Trends / Centric Wealth High Net Worth Investor Report provides some timely insights into the investment habits of Australia’s 300,000 millionaires.
The report findings show that high net worth (HNW) investors (those with portfolios valued over $1 million) are feeling more adventurous than during the GFC, with only 14% saying they are still accumulating cash while waiting for volatility to recede, versus 40% in December 2008. Half (52%) say they are buying undervalued assets on an opportunistic basis, compared to 42% in 2008. Some are also more focused on diversifying their portfolio than they were before (10%) and 11% plan to sell defensive investments to focus on higher growth opportunities, versus 8% moving in the opposite direction.
The online survey of over 1,600 HNW individuals was conducted between November 2009 and January 2010, and extracts from the resulting report released at a co-hosted Investment Trends / Centric Wealth event in Sydney today.
Principal of Investment Trends, Mark Johnston, unveiled a range of findings that provide insight into the changing mood and behaviour of investors following the GFC.
“A similar survey in 2008 has given us valid points of comparison between trends at the height of the GFC and those that were evident once the recovery was well established,” said Mr Johnston. “The events of the GFC also gave rise to some additional questions that we hadn’t asked previously. These related both to investors’ intentions to invest in complex products; and their plans in relation to growth or higher risk assets.”
The report states that, while around half, or 53%, of those surveyed held some form of alternative investment, these formed a relatively small part of their total portfolios, averaging at around 6% of all HNW investors assets overall (that is, 12% among the half who used them).
“We were interested in gauging investor attitudes toward specific products that were implicated in some of the more dramatic crashes and downturns,” said Mr Johnston. “Those definitely out of favour post GFC include agribusiness and mortgage trusts. However, demand for alternatives more broadly is returning, with HNW investors saying they would be comfortable allocating a maximum of 12% of their portfolios to non mainstream assets at this juncture, up from a ceiling of 10% during the GFC.”
Some of the areas that look set for growth include:
- exchange traded funds (ETFs): 8% of all HNW investors are currently evaluating an investment here
- commodities funds (7%)
- and even contracts for difference (CFDs) (7%)
The research also explored HNW investors’ attitudes to their advisers, how and from whom they receive advice, and what they expect from their adviser relationship.
“Monitoring trends in this way offers valuable insights into investor behavior, what the industry in general can expect and how advisers can be more prepared to meet HNW client needs, in terms of both product knowledge and the level of service they provide,” said Mr Johnston.
It also provided geographical breakdowns that show some interesting differences – and similarities – between investors from different states.