Increasingly, investors in the UK are considering the prospect of investing in cryptocurrencies rather than consulting with a financial adviser to meet their anticipated returns.
Changing Investment Trends Among UK Investors
The 2023 Schroders Global Investor Study revealed that among UK investors’ 37% of them are inclined towards trusting cryptocurrencies, while 31% prefer seeking advice from financial advisers. Tied for the second position at 36% are options to save more and spend less, along with opting for higher-risk investments. Subsequently, investing in cyclical stocks stands at 35%, and borrowing more money is a con.
As uncertainty fueled by rising inflation and geopolitical tensions grows, a notable trend among UK investors is the inclination towards cash. Presently, 40% of investors favour cash, aligning with the percentage invested in active investment/mutual funds.
In contrast, a mere 14% are involved in non-actively managed investments. This shift reflects a cautious approach as investors navigate the dynamic financial landscape, seeking stability in the face of evolving global challenges faced by 34% of investors.
Despite increased interest rates, UK investors maintain substantial return expectations. The minimum desired return stands at 8.2%, while the realistic income expectation is slightly higher at 8.5%.
Moreover, a significant portion of around 79% of UK investors hold the view that we are entering a new era of market and policy dynamics. Consequently, heightened inflation and increased interest rates, 86% have adjusted their investment approach accordingly.
Worldwide, the significance of active management was evident for many investors, and private assets were deemed a crucial diversification tool. Approximately 34% expressed the belief that sustainable funds, believing in their potential for superior returns.
The portion of investors steering clear of sustainable funds due to performance worries has halved compared to the previous year’s survey. This attests to a growing acknowledgment of sustainability’s potential for robust financial performance.
Schroders’ Insights on UK Investors’ Shifting Strategies
Schroders’ Head of Wealth for the UK Client Group, Doug Abbott, remarked, “The change in the inflation and rates landscape is influencing investors’ portfolio considerations. Many are adjusting their allocations to include cash investments as a response.”
Nevertheless, as investors anticipate annual returns of 10.5% in the coming five years, it is evident that they must diversify their portfolios across various asset classes to meet their goals.”
” The long-term structural changes in deglobalization demography, and decarbonization point to an extended period of elevated inflation compared to the past decade. In light of these trends, long-term investment strategies will be essential.”
Higher Inflation and Interest
Schroders’ Chief Investment Officer and Co-Head of Investment, Johanna Kyrklund, expressed that in the current investment landscape shaped by the ‘3Ds’—deglobalization, demographics, and decarbonization—investors are adjusting to the reality of enduring higher inflation and interest rates. This underscores the importance of embracing a diversified and flexible investment strategy to navigate the evolving market dynamics.
“The study results indicate varying rates of adjustment among investors. Schroders conducted interviews with 23,000 investors across 33 different global locations to gather these insights.”
“Every asset has been revalued to compete with the returns provided by cash in bank accounts. Valuation is once more a significant factor in investment considerations.” “Relative to the past 15 years, it is necessary to adopt a more adaptable and engaged approach to your investment strategies.”