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Volatility drives investors to risk-off

Risk managementMarket volatility is undermining investor confidence and driving them to safer assets, according to a report from Natixis Investment Managers.

The Paris-based multi-affiliate company, which specialises in active investments, claims that the push by investors to safety is “set to turn” many to active investments.

The survey of 9,100 individual investors across Asia, continental Europe, the UK, Latin America and the Americas, found that:
     •   A majority of investors worry market volatility undermines their ability to reach their investment goals
     •   Global investors are currently expressing a more defensive approach to portfolio construction with a stronger focus on risk but not giving up return expectations
     •   Investors are predisposed to favour active investments but still have misconceptions about passive investments when it comes to risk and return

The survey also revealed that individual investors globally recognise the need to look beyond current market noise, with an overwhelming majority (87%) highlighting the importance of long-term returns over short-term goals.

Darren Pilbeam, head of UK retail at Natixis Investment Managers said: “The volatility seen over the course of the year has spurred a more defensive approach, with investors rebalancing their portfolios to prepare for a perceived market downturn.

“They are battling multiple considerations – risk management, higher return expectations, as well as the desire to integrate ESG into their investments.

“Capturing the best opportunities and reconciling risk and return expectations while pursuing alpha require a long-term view and a highly active approach to investing.”

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