Respondents to the survey rely on their own experience most in making investment decisions above professional advice and information published by financial institutions and investment consultants.
The least trusted recommendations come from friends and family, according to the survey, which was conducted in August to 2,500 investors (with at least $100,000 of liquid assets) in Australia, Hong Kong, Japan, Singapore and Taiwan.
However, the survey found that there is often a disconnect between their expectations, actions and intentions, particularly in periods of market volatility.
As much as 48% of the respondents in the region thought that the best strategy during uncertainty was to try to time the market and buy risky assets as they got cheaper. But, the planned allocations of these respondents showed cash or cash-like assets topping the list — despite only 24% saying that selling risk and hoarding cash was the best strategy in periods of market stress.
This implies a potential gap between how investors imagine they will react in times of uncertainty and how they do act.
Hong Kong’s investors standout for the disconnect between intentions and practice, according to the survey.
About 56% of respondents in the territory replied that the best course of action is to buy risky assets as they cheapen during periods of market uncertainty, yet the difference between those intending to increase and reduce cash exposure was +32%, compared with a regional average of +18%.
“We have long believed that a deeper understanding of cognitive and emotional biases helps mitigate their effects and should help our clients make better investment decisions,” noted Kimberley Stafford, head of Pimco Asia Pacific.
There is also as disjunction between the region’s investors’ expectations for their own portfolios, which they to grow over the next 12 months, with their outlook for local and global economies, which believe will contract, according to the survey.
Despite their optimism, respondents said that the coronavirus pandemic has dented their confidence in their decision-making, with 43% saying that it has had a negative impact and 10% that it has had a major negative effect.
On the plus-side for asset managers, such as Pimco, the survey also found that the pandemic has heightened investors’ enthusiasm for actively managed funds. Across the region, 55% of respondents’ portfolios were actively managed, with 46% of those surveyed saying they will likely to allocate more to active strategies in the next three months.
Multi-asset strategies and ESG assets were the most in demand, after cash, according to the survey.
“The next few years will be an incredibly important time for active management as we expect markets to remain volatile” noted Adrian Stewart, head of client management Apac ex-Japan at Pimco.
