Most Canadian investors see a new regime in market behaviour

Survey examines investor attitudes on inflation, AI, private markets, sustainable funds and more

Most Canadian investors see a new regime in market behaviour

A majority of polled Canadians agree the recent multi-year trends in inflation and interest rates are ushering in a new era for the markets.

That’s among the key Canadian takeaways from Schroders’ 2023 Global Investor Study. The extensive 23,000-investor study, which spans 33 locations across the world, includes 1,000 investors in Canada.

Among those in the Great White North, 70% agreed – including 23% who “strongly agreed” – that “thanks to rising global inflation and interest rates, we are witnessing a new regime in policy and market behaviour.”

Rising inflation has prompted 48% of Canadian investors in the study to change their investment strategy. Just over a third (36%) are anticipating higher returns in their portfolios than last year, while two fifths (40%) believe wider adoption of AI will have an impact on broad macro trends.

The survey also revealed a sustainable investing focus among most investors in Canada.

Fifty-seven per cent of those polled agreed sustainable funds are attractive because of the wide environmental impact they have, while 52% said being able to choose investments in alignment with their personal sustainability preferences would encourage them to raise their sustainable investments. However, 45% say the lack of clear, agreed-upon definitions on sustainable investing is holding them back.

Another 46% of Canadian investors said they’d prefer if the funds they invested in avoided companies with high emissions. In line with that, 35% agreed climate is the most important area of shareholder engagement for both asset managers and investors, and one quarter (26%) agreed strongly that “encouraging companies to adopt sustainable practices will help them generate long-term value.”

While the struggles of public markets in 2022 have made more investors curious about private markets, three fifths of investors in Canada (58%) saw the lower transparency in private assets as a barrier.

Half of the Canadian investors surveyed identified higher average performance as a feature that attracted them to private markets. But recognizing that not all private-market investments can be winners, 21% of investors agreed manager reputation and brand are the most important factors in deciding to make a private asset investment.