Legg Mason finds key to boost income investment

GlobalisationGlobally diversified funds may encourage investors to move away from their domestic markets in pursuit of income-producing assets, while many continue to shun single-country funds, research finds.

Legg Mason, the asset manager, found that only 19% of 3,000 global investors that it surveyed hold income-producing securities that are invested outside of their domestic markets.

To gain exposure to international income opportunities, the survey finds that income investors globally would prefer diversified funds.

A majority (60%) would opt for a global fund that invests across multiple countries, while just 17% would choose a single-country fund. Almost a quarter (23%) had no preference. 

US investors are the most home-biased with just 11% of them holding income assets that are invested abroad. French investors (13%) are similarly inclined to eschew international markets.

Asian investors are the most globally minded, with 33% of Hong Kong investors’ income assets invested abroad.

In Europe, Spanish (27%) and UK (21%) investors are the most exposed to international income.

However, more than two-thirds of income investors (67%) say they are more focused on investing for income internationally compared to five years ago. 

The research also found that investors globally are seeking, on average, an annual investment return of 8.9%, but in reality are receiving 6.1%: a shortfall of 2.8%.

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