Substantial discrepancy between locals' investment goals, results
By John Liu, The China Post
April 23, 2014, 12:08 am TWN
TAIPEI, Taiwan -- Taiwanese investors are among the most unrealistic in setting investment targets, according to a report released by Legg Mason Global Asset Management, yesterday.
Legg Mason, the world's 20th largest asset manager, held a press conference yesterday to report findings in its 2014 Legg Mason Global Investment Survey, which gathered results from 4,320 investors across 20 countries/markets.
The survey revealed that Taiwanese investors are seeking to achieve on average a 9.1-percent annual rate of return, among the highest figures in Asia. However, the actual rate of return local investors receive is 5.5 percent. The 3.6-percent income gap is higher than the global average of 3.3 percent.
Interest in Foreign Market Investments
Taiwan investors in general are also very pessimistic about the future, driven by inflation concerns and slow economic growth in Taiwan. About 51 percent of investors cite inflation as their number one concern. When asked about their optimism regarding investments in the coming years, the average score was 5.7 out of 10, well below the global average of 6.8.
“This is interesting because on one hand, investors in Taiwan have high ambitions, yet the figures show that they are negative about the investment outlook, pointing to the discrepancy between the desired and actual rate of return,” said Rick Chen, general manager of Legg Mason in Taiwan.
Chen pointed out that investors need to find more suitable investment options to align expectations with reality and that Taiwanese investors are becoming more open to dipping into international investing. While local investors allocate only 21 percent of investments outside Taiwan, about 64 percent of investors believe investing in foreign markets has the potential for higher returns, the survey showed.
According to Legg Mason, Taiwan has one of the lowest collaborations with financial advisors, with only 21 percent of investors currently working with a financial advisor. It is comparatively low compared with the 56 percent in Hong Kong. Local investors' uncertainty about investing overseas may be due to the fact that they lack experience working with financial advisors, Legg Mason said.
Local Investors Among the Most Conservative
When asked about the primary investment goals, “provide for my own retirement” ranked the highest among local investors (79 percent), followed by “grow my wealth” (69 percent).
“Investors around the world have one thing in common — the need for enough assets to provide for their retirement years,” said Matthew Schiffman, managing director and head of global marketing at Legg Mason Global Asset Management, adding that “investors everywhere can, and should, do more to prepare for their retirement.”
Local investors are also among the most conservative in the world. They hold 32 percent of cash and cash equivalents in their portfolio, much higher than the global average of 27 percent. Still, one-third of investors are planning to increase their exposure in this asset class, Legg Mason said.