Global Investor Sentiment Survey

Transcription

1 2014 Global Investor Sentiment Survey K E Y I N S I G H T S

2 About the Survey The Franklin Templeton Global Investor Sentiment Survey, conducted by ORC International, included responses from 11,113 individuals in 22 countries: Brazil, Chile and Mexico in Latin America; Australia, China, Hong Kong, India, Japan, Malaysia, South Korea and Singapore in Asia Pacific; France, Germany, Greece, Italy, Poland, Spain, Sweden and the UK in Europe, and the United States and Canada in North America. Survey respondents were between the ages of 25 and 65 in Latin America, Asia Pacific and South Africa and 25 and older in Europe and North America. Respondents were required to own investable assets, such as stocks, bonds, managed funds, etc. In addition, a minimum investable asset threshold was set for each country to ensure that the respondent had sufficient investments, providing a knowledge base from which to answer the survey questions. The survey was completed from 2 to 15 January, 2014, in all countries. Our results indicate that by many measures investors are optimistic about the year ahead. Following 2013, a year that saw the global economy grow at its fastest pace in nearly three years, investors show growing optimism about stocks, their investment returns and their ability to reach their financial goals. But this optimism is tempered by a lingering sense of uncertainty, as over 50% of investors indicate they ll follow a more conservative strategy this year. In the context of our global findings, the results for Australia reveal a unique story. Read on to learn how investors like you are planning for what s next. 2

3 Key Insights from the Australian Survey Investors in Australia expect their average annual rate of return will be better in 2014 than in 2013 and better over the next 10 years Investors have a positive stock market outlook for 2014 and plan to invest more in equities, both Australian and global, this year, than in bonds Some concerns remain over the investment outlook for Europe and the U.S. Almost one-half of those surveyed will seek some professional advice this year 3

4 Investors are Optimistic about Reaching Financial Goals The overwhelming majority of Australian investors are optimistic that they will reach their financial goals. Investors expect their average annual rate of return will be better in 2014 than in 2013 and even better over the next 10 years. Investor Optimism About Reaching Financial Goals 2014 Survey 7% Very Pessimistic 16% Pessimistic Optimistic 76% Very Optimistic Average Annual Rate of Return Expected Previous 7.8% 6.9% Current 8.4% 8.1% Next 10 Years 11.1% 10.7%

5 Investors in Australia have a Positive Stock Market Outlook for 2014 Investors in Australia have a positive stock market outlook for About two-thirds of all investors said the stock market was up in 2013 and this is matched in their expectations for the current year with 65% believing the market will go up in Less than half of Australian investors plan to adopt a more conservative investment strategy in 2014, while 27% plan to adopt a more aggressive one. Stock Market Performance Last Year and This Year 43% 56% 2 24% 23% 9% 3% 9% 9% Up Significantly Up Slightly Essentially Flat Down Slightly Down Significantly Change in Investment Strategy 24% 28% 36% 33% 26% 28% 1 1 0% 1% Much More Aggressive Slightly More Aggressive No Change Slightly More Conservative Much More Conservative 5

6 Australia Offers the Best Investment Opportunities Followed by Asia While a significant number (45%) of Australian investors consider the domestic equity market to offer the best equity returns in the coming year, they think Asia will be equally likely to offer the best returns over the next 10 years. A majority of investors also think that Australia will offer the best fixed income returns in 2014 and over the next 10 years. Best Equity Investment Opportunities This Year and Over the Next 10 Years Australia Asia (inc. India) U.S./Canada Central & Eastern Europe Middle East Africa South & Central America Western Europe New Zealand 4% 4% 1% 3% 4% 3% 1% 13% 14% 28% 35% 35% 45% 2014 Over Next 10 Years Best Bond Investment Opportunities This Year and Over the Next 10 Years Australia Asia (inc. India) U.S./Canada Western Europe Central & Eastern Europe Middle East Africa South & Central America New Zealand 6% 6% 4% 4% 1% 13% 14% 19% 24% 50% 46% 2014 Over Next 10 Years 6

7 Equities and Property Remain the Most Favoured Asset Classes Australian investors think stocks, property and non-metal commodities will be the three top-performing asset classes in 2014 and over the next 10 years. In 2014, 66% of investors believe that stocks will be one of the top three best performing asset classes this year (compared to 60% in 2013). There is a significant increase in optimism surrounding the property market with 70% of investors (compared to 59% in 2013) believing that this asset class will be one of the best performing asset classes this year. Top Three Asset Classes Expected to Perform Best in 2014 and Over the Next 10 Years 2014 Survey Stocks Property Precious Metals Non-metal Commodities Bank Savings/Fixed Term Deposits Currencies Gov't Securities Corporate Bonds Alternatives 21% 18% 16% 17% 1 11% 17% 16% 31% 35% 37% 39% 29% 28% 66% 63% 70% 75% 2014 Over Next 10 Years Top Three Asset Classes Expected to Perform Best in 2013 and Over the Next 10 Years 2013 Survey Stocks Property Precious Metals Non-metal Commodities Bank Savings/Fixed Term Deposits Currencies Gov't Securities Corporate Bonds Alternatives 18% 17% 16% 1 10% 9% 10% 3 30% 24% 45% 45% 41% 41% 60% 61% 59% 68% 2013 Over Next 10 Years 7

8 Some Concerns Remain over the Investment Outlook for Europe and the U.S. The Eurozone debt crisis (61%), slow economic outlook (50%) and unstable domestic political environment (37%) are the top concerns regarding investing in Europe for The large fiscal debt (65%) and slow economic outlook (49%) are the top concerns about investing in the U.S. for Twenty percent of Australian investors say they have no concerns about investing in the U.S. while 16% have no concerns about investing in Europe. Top Concerns About Investing in Europe Top 3 Concerns Eurozone debt crisis 61% Slow economic outlook 50% Unstable domestic political environment 37% General market volatility 31% There are better opportunities elsewhere 30% Inflation concerns 17% Low interest rates 15% Deflation concerns 11% I have no concerns about investing in Europe 16% Top Concerns About Investing in the U.S. Top 3 Concerns Large fiscal debt 65% Slow economic outlook 49% General market volatility 31% There are better opportunities elsewhere 27% Tapering of the Federal Reserve s bond buying program (QE) 26% Unstable domestic political environment 23% Inflation concerns 21% I have no concerns about investing in the U.S. 20% 8

9 Seeking Professional Financial Advice Forty-six percent of investors say they are very or somewhat likely to seek professional financial advice in 2014 a bit higher than in People who say they are not likely to seek professional financial advice this year are most likely to say they don t need it (26%), they are happy with how things are (30%) or it s too costly (20%). Likelihood to Seek Professional Financial Advice Very Likely 17% 19% Somewhat Likely 23% 29% Neither Likely or Unlikely 27% 25% Somewhat Likely 10% 15% Very Unlikely 17% 18% Main Reason for Not Seeking Professional Financial Advice Happy with how things are Too costly Prefer not to invest Already have a planner Too difficult/confusing Other reason Don't need it 4% 3% 1% 11% 13% 20% 20% 27% 26% 30% 33%

10 Perspective from Franklin Templeton Investments The U.S. Federal Reserve s decision to taper can be interpreted as a vote of confidence in the U.S. economy as different barometers show a rise in activity and confidence among businesses and consumers. The European economy also started 2014 on a bright note with indications of a strong rebound in business activity. There are signs that some painful adjustments to improve competitiveness in some crisis-ridden countries are paying off. We believe the developed economies are progressively improving in terms of economic growth, which creates opportunities for investors to unlock the potential in developed market equities. While investors start to recognize the potential in the U.S. economy, it is important that they don t overlook the progress made in Europe, thereby missing out on the opportunities there. As for emerging markets, we have recently seen significant volatility in these markets, which has spooked some investors, but is also something we have become accustomed to. We believe the bottom line for emerging markets is that the long-term investment case hasn t dramatically changed. And we don t see it changing as long as these three themes remain in place: emerging markets economic growth rates in general continue to be at least three times faster than those of developed markets; emerging markets have much greater foreign reserves than developed markets; and the debt-to-gdp ratios of emerging market countries generally remain much lower than those of developed markets. Of course, there are notable outliers given the many and varied emerging countries, but we believe those basic facts augur well for the emerging markets long-term prospects. As is often the case, we believe adverse short-term news flow in developed or emerging markets typically creates attractive investment opportunities. In view of the uncertainties in selected asset classes, we see the need to diversify investments across different asset classes and investors should be informed that there are other better options out there in the market. 10

11 Franklin Templeton Investments Gain from Our Perspective At Franklin Templeton Investments, we re dedicated to one goal: delivering exceptional asset management. By bringing together multiple, world-class investment teams in a single firm, we re able to offer specialised expertise across styles and asset classes, all supported by the strength and resources of one of the world s largest global money managers. This has made us a trusted partner to millions of investors and institutions across the globe. Unwavering Focus on Investment Excellence At the core of our firm you ll find independent investment teams each with a focused area of expertise. And because our portfolio groups operate autonomously, their strategies can be combined to deliver true style and asset class diversification. All of our portfolio teams share a common commitment to excellence grounded in rigorous, fundamental research and robust, disciplined risk management. Decade after decade, our consistent, research-driven processes have helped Franklin Templeton earn an impressive record of strong, long-term results. Global Perspective Shaped by Local Insight In today s complex and interconnected world, smart investing demands a global perspective. Franklin Templeton pioneered international investing over sixty years ago, and our expertise in emerging markets spans more than a quarter of a century. Today, we have over 590 investment professionals on the ground in 25 countries, spotting investment ideas and potential risks firsthand. Across the globe, our locally-based portfolio teams bring in-depth understanding of local companies, economies and cultural nuances, and share their best thinking across our global research network. Strength and Stability Franklin Templeton is a global leader with over $980 billion in assets under management serving clients in over 150 countries. 1 We run our business with the same prudence we apply to asset management, staying focused on delivering relevant investment solutions, strong long-term results and reliable, personal service. This valuesdriven approach, focused on putting clients first, has helped make Franklin Templeton among the most trusted names in financial services. 1. As of 31 December 2013; investors represented by total number of shareholder accounts. 11

12 Franklin Templeton Investment Australia Limited Level 19 Level 30, Aurora Place 101 Collins Street 88 Phillip Street Melbourne VIC 3000 Sydney NSW Freecall IMPORTANT LEGAL INFORMATION Issued by Franklin Templeton Investments Australia Limited (ABN ) (Australian Financial Services Licence Holder No ), Level 19, 101 Collins Street, Melbourne, Victoria, This material does not constitute investment advice or an invitation to apply for securities. Investors should seek professional financial advice and obtain a full explanation of any proposed investment before making a decision to invest. Investments involve risks including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Not all products or services may available in all jurisdictions. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in the fund adjust to a rise in interest rates, the fund s share price may decline. Investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. Investments in emerging market countries involve heightened risks related to the same factors Franklin Resources, Inc. All rights reserved. GISS B 12/13