Survey suggests time for low volatility theme

Added 13th April 2016

Wild market swings have soured investor sentiment and Legg Mason Global Asset Management believes the timing is right for a low volatility strategy.

Survey suggests time for low volatility theme

Continuing volatility in global markets has created conditions for products that aim to preserve capital. With a low volatility product, the upside may be capped but the downside is limited when the markets go down, said head of China and Hong Kong, Freeman Tsang.

The firm intends to launch such a product in Hong Kong this year, he added.

The strong effect of volatility on investors was highlighted in a recent survey by the firm which suggested global investors aged between 18-39 were less risk tolerant than the older generation.

The online poll interviewed about 5,000 investors across 19 markets with investable assets of over $200,000 between December and January. 

Three-quarters of the millennials said they were losing faith in making money in financial markets, compared to 61% for investors aged 40 or above. The former were also more concerned about another financial crisis, with 79% saying so.

Investors who said they are losing faith in making money in financial markets:

 Aged 40 or above Global 61%
 Asia  68%
 Aged 18-39   Global   75%
 Asia  78% 

Source: Legg Mason survey


In regards to Asia-based millennials, 78% said they were worried that the world is on the brink of another financial crisis, higher than global average. But they were still more aggressive than global peers in terms of embracing risks and expectations on returns.

Asian investors also showed less tolerance for underperformance, with more than half saying that they would sell a financial products that declined in value for 3 months in a row, compared to 45% for global investors.

Investment director Ajay Dayal said that by limiting the downside, there is less chance for investors to reduce their exposure on equities, and thus enhancing returns over the long run.

“Investors in the future might demand less high-beta products, or those with high volatility, but join the markets only to seek stable returns."

Tsang added that rather than showing interest in one sector only, such as technology, they may instead have a stronger preference for investing in something more sustainable.

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address


FSA Investment Forums: Singapore & Hong Kong 2016

Singapore, Tuesday 25th October

Hong Kong, Thursday 27th October

FSA Investment Forum: Manila 2016

Wednesday 23rd November