Global investors target 11%-plus returns, despite Covid-19

Investors across the world expect to see annual investment returns of 11.5% over the coming five years and believe that the impact of the Covid-19 pandemic will peter out in less than two years, according to Schroders’ Global Investor Study 2020.

The results of the survey also depict a highly optimistic view of the future by regional investor respondents. Indeed, just 5% of Hong Kong investors – who expect to see a return of 10.3% over the same time period – said that they expect the negative economic impact caused by the pandemic to last for more than four years.

The extensive study was based upon more than 23,000 investors globally, including 500 from Hong Kong.

Respondents in Hong Kong said that they believe the negative fallout of the pandemic to last an average of 1.73 years. Meanwhile, two-thirds (69%) of respondents to the survey said that the fallout will last from six months to two years.

Even this year, investor respondents expect to offer bumper returns despite the impact of the coronavirus. Those from the special administrative region predict that they will get 8.1% in returns over the coming 12 months, compared with 8.8% a year ago. Meanwhile, the global average return expectation was 8.8% for the coming year, versus 10.3% in 2019.

FOCUSED FOR FALLS

Hong Kong-based investors also claim to have been rapid responders to the coronavirus’s spread. All-told, 85% of participants from the city said that they had made immediate changes to their investment portfolio upon the spread of the pandemic.

Globally, investors claimed to be relatively relaxed about short-term investment drops. A total of 65% said that their concern was “non-existent” or “low” if their investments drop over a short time period (in Hong Kong the number was 59%). It is to be hoped that most respondents were telling the truth, given the massive stock drops seen during March, only for markets to rebound through May to August to the same levels.

The Covid-19 crisis has also triggered more focus on savings, with 34% of investors stating that they now think about their investments at least once a week, compared with 19% before the pandemic.

Close to two-thirds of people (60%) who describe themselves as having an ‘advanced’ or ‘expert’ level of investment knowledge, state that their level of worry, were their investments to drop for a short period of time, is non-existent, which highlights their higher risk tolerance during periods of uncertainty.