This suggested either continued risk-aversion among Asia-Pacific investors, despite their rising optimism, or else a wish to retain greater liquidity to allocate when opportunities arise, according to the US asset manager’s second quarterly survey of investors.
Yet, Apac investors have become more confident about outperforming both each other and benchmarks.
About 53% expect to achieve better-than-average returns over the next year, up from 42% in Q3; half of them are confident of outstripping their benchmark indices, compared with only 39% in the previous quarter.
The most self-assured are investors in Taiwan, Australia and Singapore; the least bullish about their abilities are in Hong Kong and Japan, according to the survey.
“As it is very unlikely that all those who think they will achieve better-than-average returns will actually do so, investors should beware of cognitive and emotional biases that can lead to unrealistic expectations,” warned Pimco.
Indeed, the survey results imply inconsistencies in investors’ expectations, actions and intentions, which emphasise the importance of possible biases that may affect investment decision making, according to the asset manager.
For instance, there was a five percentage point increase in the number of investors seeking to allocate more to active strategies, with 51% of respondents across the region intending to raise exposure to actively-managed funds in the next three months – despite at the same time retaining high cash levels and feeling confident in their own investment abilities.
After cash, multi-asset strategies were the most popular asset class, followed by emerging markets equities which pipped ESG assets funds for third place.
Pimco conducted its latest survey of 2,500 Apac investors with liquid assets of US$100,000 or more in December 2020. Responses were collected from Australia, Hong Kong, Singapore, Taiwan, and Japan (500 in each) to gauge sentiment.
Confidence in ability to get better than average returns over next 12-months
| 4Q, 2020 | 3Q, 2020 | |
| Taiwan | 64% | 53% |
| Australia | 63% | 46% |
| Singapore | 59% | 45% |
| APAC | 53% | 42% |
| Hong Kong | 48% | 40% |
| Japan | 30% | 24% |
Confidence in ability to outperform benchmark indices over next 12-months
| 4Q, 2020 | 3Q, 2020 | |
| Taiwan | 61% | 50% |
| Australia | 57% | 40% |
| Singapore | 55% | 41% |
| APAC | 50% | 39% |
| Hong Kong | 50% | 41% |
| Japan | 27% | 24% |
MORE CONTRADICTIONS
Despite retaining cash balances, Apac investors are much more optimistic about the macroeconomic outlook over the next 12 months compared with the previous survey in the third quarter 2020. Macroeconomic outlooks that were net negative in Q3 turned sharply positive at year end.
On the other hand, despite a stated surge of optimism, 70% of respondents had rising concerns about a variety of broader or longer-term financial issues, such as job security and retirement savings.
Sentiment has also shifted about the impact of the Covid-19 pandemic on investments.
In the Q3 survey, 47% of investors expected the pandemic to have a negative impact on their portfolios over the next 12 months. In the latest poll almost as many said the pandemic will likely be positive (37%) as negative (38%).
Finally, there was a notable generational disparity in responses, according to the survey.
Younger investors are much more likely (55%) to always or often trust their own experience when investing than older investors – and they are even more prepared to give professional advisers the benefit of the doubt.
