Alternative investment strategies on rise - Natixis survey

Added 12th May 2015

Alternative investment strategies on rise - Natixis survey

Singaporean investors outnumber their global peers when it comes to rejecting traditional portfolios, which typically have a mix of stocks and bonds. 

Nearly 75% of Singaporean investors (compared to 69% globally) believe the traditional approach to building a portfolio is not the optimal strategy. 

“A vast majority of Singapore investors now question whether traditional investment strategies, alone, are the best way to achieve the return goals they need,” said Madeline Ho, head of wholesale fund distribution in Asia-Pacific.

“Yet they continue to invest primarily in investments they understand and report a lack of strong investment knowledge overall.”

Only 49% of Singaporean investors understood the concept of alternative investments, the survey findings showed. But about 80% of the respondents said they would consider alternatives if they got advice.

 “It is encouraging that many say they would invest in alternatives if their advisor recommended them, but it is important that advice includes education on how alternatives can be utilised to provide diversification and risk management as well as investment performance.”

Singaporean investors score significantly higher than the global average on three aspects: looking for avenues to better insulate their portfolio from volatile markets, diversification of portfolio risks, and generating new and reliable sources of income. 

“This presents a clear challenge for financial advisors to source and deliver solutions for a new set of investor demands,” Natixis said. 

Optimism prevails

Singaporean investors seem to be generally optimistic on the markets. 

Nearly three in four of the respondents believe their portfolio will perform well in 2015, and many believe they will achieve better returns than in 2014.

“The optimistic view of their current investment stems from double digit equity gains in 2014.”

The survey findings showed investors need an average annual return of 10.1% (9.7% globally) after inflation to meet their financial needs. 

However, risks prevail.

More than half of the respondents (57% versus 45% globally) fear a global economic slowdown in the next 12 months could pose a threat to their portfolios. Other threats include low global growth, a rise in the US interest rate, and oil price shocks.

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