But despite being more likely to stay the course, Canadians still vulnerable to seller’s remorse
The turbulence that roiled markets last year was an unwelcome surprise to investors, prompting many to grow anxious and seek safety for their portfolios. But a new global study suggests that compared to their peers, Canadians are more likely to remain steadfast with their portfolios.
Schroders has released the first phase of their annual Global Investor Study, which polled over 25,000 investors across 32 countries. The survey focused on people who plan to invest a minimum of 10,000 euros (or the equivalent) in the next 12 months, and have made changes to their investments within the last 10 years.
This year’s survey has found Canadian investors to be more likely to stay the course than their global counterparts. During 2018’s volatility, 49% did not change the risk exposure in their portfolios, in contrast to the 30% that did so across all investors surveyed around the world. Canadian respondents were also more likely than those in other geographies (27% to 20%) to not let their investment decisions be swayed by the political or market environment.
Looking at holding periods, the survey found that investors around the world stuck to their investments for 2.6 years on average — just over half the recommended investment period of five years. Canadians were among the most patient with an average holding period of 4.1 years; investors in the US and Japan similarly patient, staying committed to their investments for at least four years.
Still, investors in Canada were not immune to regrets over their decisions. Just under half (43%) of the respondents said they haven’t achieved the performance they wanted from their investments over the past five years. Probing into the reasons for this dissatisfaction, the survey found that they were more likely to say:
- They should have remained invested for longer (8%, vs. 5% who regret not taking their money out sooner);
- They should have taken more risk (9%, vs. 5% who said they took too much); and
- They acted on bad advice from their financial advisor (4%, vs. 3% who ignored their advisor)
The lack of satisfaction was aggravated by rising expectations of total return. When asked what income and capital growth they expected to make from their total investment portfolio over the next five years, the participating Canadians cited an average of 8.9%, compared to last year’s average of 7.9%. The survey also found a somewhat narrow gap between the minimum level of income people would like to receive (8.8%) and the level of income they expect to receive in the course of the next 12 months (7.9%).
Schroders also shared other key findings on Canadian investors, including:
- Over a third (38%) are very confident with exactly how much money they have across providers;
- Just over two thirds (68%) check their investments at least monthly; and
- Just over three tenths say they prefer funds that invest in Canada (33%) or in countries familiar to them (31%), while 21% think emerging markets are too risky