Posted inStudies

Asia investors turn to high risk assets

But most younger clients say performance impacts their mental health.
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Retail clients’ risk appetite is growing to compensate for the uncertainty brought by the pandemic and rising inflation, Schroders found.

The asset management giant surveyed 23,000 people across 33 jurisdictions around the world and discovered that 37% are willing to allocate more to high-risk assets. This rises to 44% for those aged 18-37.

Schroders said that many people “feel compelled” to take on more risk especially in up-and-coming asset classes.

When presented with a scenario where interest rates are at zero or negative, 57% of the younger group said they would make riskier investments to pursue returns, while just 17% would be more likely to spend and less likely to save.

This is despite 68% of those in the 18-37 age bracket stating that investment performance has an impact on their mental health.

Approach risk judiciously

Geographically, Asian investors seem to be the most likely to turn to high-risk investments (59%), followed by those in the Americas (53%) and Europe (49%).

But the quest for higher returns is pushing people to invest in assets than they previously considered as too risky, such as electric vehicles (24%); biotech or pharma funds (23%); and internet and tech stocks taking joint third position with cryptocurrencies (22%).

Lesley-Ann Morgan, head of multi-asset strategy at Schroders, said: “Our research indicates that many people feel they now have to take on more risk in pursuit of returns given the current pandemic.

“The challenging economic conditions that we have seen over the past year have likely played a part in this. Amid the low interest rate environment, riskier investment choices have unsurprisingly become more compelling, especially for younger investors.

“Investors have also been spurred into looking at a broader range of asset classes. Overall, these findings demonstrate that the proportion of investors open to embracing greater risk has increased, but with 63% of people stating that the performance of their investments also has an impact on their mental health, they should ensure that risk is approached judiciously.”

Part of the Mark Allen Group.