Almost 92% of investors surveyed in Singapore and 91% in Hong Kong said income-generating investments are extremely important in 2015.
At Fund Selector Asia’s income forum in February, asset managers stressed income investing opportunities are available across a range of asset classes despite the low yield environment.
The Legg Mason survey released today found Singapore investors mostly favored guaranteed income products, equity income funds and income producing real estate.
Hong Kong investors preferred high yield bonds in addition to equity income funds and guaranteed income products.
“Despite Singapore enjoying a sustainable economic growth and one of the lowest unemployment rates in Asia, our survey found that local investors are less optimistic than their peers in the region,” said Lennie Lim, managing director and regional head-Asia.
“More than half did not see progression towards their investment goals and are turning to income-generating investments as a source of return,” Lim added.
Over the last one year, Legg Mason has seen a rising appetite for high dividend equity funds in Asia and the search for income continues, Lim said.
More than half of the survey respondents said generating income for living expenses as one of their top three goals of investing. But only 31% feel they are meeting this objective.
“Despite low levels of inflation, the challenges of generating income in an uncertain rate environment are weighing on investors,” said Matthew Schiffman, managing director and head of global marketing.
Asia should look beyond the traditional fixed income and equity asset classes to enhance the diversification and resilience of their income-producing assets, Schiffman said.
Global income products preferred
One in eight (83%) Singapore investors surveyed had income-generating products invested internationally, slightly higher than the global average (80%).
“Some of our banking clients in Singapore would choose a US fund that focuses on capital appreciation which has a dividend payout for 4%,” Clement Lee, head of sales, Singapore and Southeast Asia, regional private banks said.
On the other hand, about 92% of the respondents in Hong Kong had income- producing assets invested internationally. This was the highest in the region.
“Hong Kong investors, among their peers in Asia, are the most open to international investments. We also see higher demand for international income products,” said Freeman Tsang, Hong Kong-based Director at Legg Mason Global Asset Management.
Singapore investors believe China (57%), India (45%) and United States (42%) offer the best investment opportunity over the next year. In regard to Hong Kong, investors ranked China first (72%) followed by United States and Japan (36%) and Singapore (34%)
Singaporeans less optimistic
Singapore investors are the least optimistic about investments compared to their peers in Asia and also ranked the lowest globally for making progress towards achieving investment goals.
Almost 37% Singapore investors surveyed lacked optimism about their investments in the coming year and nearly half (45%) of the respondents said they are not confident that their central provident fund savings can help them meet their retirement goals.
Even in terms of rate of returns achieved, Singapore investors ranked the lowest in the region at 5.4%, compared to Hong Kong (6.3%), China (8%) and Taiwan (7.3%).