High Asset

‘Challenging’ economic conditions and Covid uncertainty spur increased interest in riskier


Out of 23,000 people surveyed in 33 locations worldwide, over a third said they will allocate more towards high-risk investments.

This increased to 44% for people aged between 18 and 37, the study found.

Investors anticipate Omicron turbulence in equity sell-off

Many people are investing in new, high-risk asset classes for the first time, Schroders highlighted.

“The results indicate that, while many people feel compelled to take on greater risks to compensate for Covid uncertainty and concerns caused by rising inflation, this is even more so the case for younger investors,” the firm said.

Nearly 60% of investors in the 18-37 age group said they would make higher-risk investments in pursuit of returns when presented with the scenario where interest rates are at zero or negative.

Only 17% would be more likely to spend and less likely to save in this scenario.

However, despite favouring riskier assets where there is the increased potential to lose money, 68% of the age group said that their investment performance has an impact on their mental health.

A third of investors across age groups said they would also consider cryptocurrencies in such a scenario, while over half said they would make higher risk investments in pursuit of returns.

Global ETP flows slow in November amid concerns over Omicron

To pursue these higher returns, Schroders noted many people are now investing in assets “they previously perceived as being too risky”.

New and emerging sectors form part of the top three types of investments that people have made for the first time over the past year, the firm said.

Electric vehicle related stocks ranked first (24%), followed by biotech or pharma funds (23%), while internet and tech stocks, as well as cryptocurrencies, came jointly in third position with 22%.

Overall, younger investors had more risk appetite than older generations.

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.”

She said circumstances have “spurred” investors into considering a broader range of asset classes to invest in.

Morgan added: “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.”


Source link