Cameron Blanks from Pacific Equity Partners speaks to James Dunn at The Inside Network’s Alternatives Symposium in Melbourne on looking through the cycles and catalysing growth. The Inside Adviser
Duncan Farley from RBC Bluebay Asset Management speaks to Giselle Roux at The Inside Network’s Alternatives Symposium in Melbourne on macro trends that matter more. The Inside Adviser
Aussie investors more bullish on the future
Individual investors in Australia are increasingly optimistic about the future for their own portfolios and the world in general – significantly more so than others in the region, according to a survey by PIMCO.
The ‘PIMCO APAC Investor Sentiment Survey Q4 2020’ shows a surge in optimism compared with the same questions being asked for the September quarter.
The confirmation of a vaccine for COVID in September and a rebound by markets would have been major contributors to this. Similar results were shown across APAC – Japan, Hong Kong, Singapore and Taiwan were also surveyed – but to a less-marked degree than for Australia.
The survey for both the September and December periods reflected the views of 2,500 investors, each with investable assets of more than US$100,000 ($A131,000).
The latest results, published yesterday (March 25) reflect a much stronger degree of optimism among Australian respondents than last quarter: 55 per cent more respondents expect economic growth in Australia over the next 12 months and 50 per cent more respondents expect growth in the APAC region.
In terms of expectations for the global economy, there has been a 43 per cent turnaround in sentiment, from an overall expectation of contraction in the last survey to growth in this survey.
The increase in optimism is also reflected in respondents’ expectations for their own portfolios, although to a lesser extent: in terms of their own portfolios, some 63 per cent of the Australian respondents expect to achieve better-than-average investment returns over the next 12 months (up from 46 per cent last quarter), while 57 per cent expect to outperform the benchmark index (up from 40 per cent).
The survey uncovered a divergence in the level of optimism between male and female investors in Australia. Almost twice as many females as males are more concerned now than they were six months ago about their personal finances and retirement savings.
According to PIMCO, the more bullish attitude of male investors may in some instances signal overconfidence, but may also reflect the disproportionately negative impact of the pandemic on female workers. The differences appear to be more pronounced than most behavioural studies show of gender differences in risk appetite.
The latest survey also showed a gender split in terms of asset allocation intentions. The proportion of females expecting to increase their allocation to property and real estate has grown since last quarter while the male respondents expect their allocations to this asset-class to remain steady. In another example of gender differences, females indicated that they are planning to allocate more to cash and cash-like assets this quarter than last, compared to male respondents, who signalled their intention to reduce their exposure. This contrasts to last quarter’s results, where the approach to cash allocation showed little gender difference.
Adrian Stewart, PIMCO’s head of client management, APAC ex-Japan, said: “Our previous survey suggested that the pandemic had hit Australian investors’ portfolios more severely than others in the APAC region, so it is pleasing to see the surge in optimism in these latest results.
“However, consistent with results last time, this recent survey identified some inconsistencies in investor sentiment, such as a level of confidence in investment returns that is unlikely to be reflected in all investors’ portfolios,” he said.
“An understanding of the cognitive and emotional biases that underlie investor behaviour can help advisers to ensure their clients make rational investment decisions and better manage their investment expectations,” Stewart added.
