According to a Goldman Sachs Asset Management (GSAM) survey on Australian retail investors, while 46 per cent of investors believe that emerging market allocations will improve investment returns only 20 percent plan to take action and invest.
“It’s good to see that the message about emerging markets has starting to hit home and people are starting to realise that if they do allocate to emerging markets they’re going to get a higher return,” GSAM Australia head of third part distribution Jessica Jones said.
“However this is not translating into people’s investment decisions. Only one of five of those surveyed actually plan to invest in emerging markets in the next year. Half are not planning to invest at all and one third don’t know,” she said.
Whilst 44 per cent of investors cited lack of awareness for investing in emerging markets, the survey also found that 81 per cent said their financial planner had not mentioned emerging markets.
“This presents a huge opportunity for us at GSAM and the industry to start communicating to clients and to advisers about some of the new opportunities that we’re seeing out there,” Ms Jones said.
The survey also showed that although retail investors continue to have strong faith in the resilience of the Australian economy and are cautiously optimistic about the year ahead, they plan to continue investing more in cash and term deposits.
“In the current environment we believe investors should maintain a diversified portfolio and an active approach to equity and fixed investment,” Ms Jones said.
In July, GSAM senior portfolio strategist Kathryn Koch said direct exposure to growth markets, such as Brazil, Russia, India and China, was essential for Australian investors.
GSAM predicted those growth markets would drive around 60 per cent of global growth in the next decade, contributing more than the United States and eurozone combined.
“We believe that 25 per cent of clients’ portfolios both in equity and fixed income should be allocated directly into some of these bigger countries that we call the growth markets,” Ms Koch said at the time.
GSAM believed the rise of growth markets would be the most important investment theme in the next decade, marking a shift from global developed markets to growth markets, she said.
Ms Koch said moving forward it would not be enough for Australian investors to invest in Australia-based mineral companies or even US or European companies.
Previously, investors have been agnostic about where to invest because developed country markets have given a similar return to the growth markets.
