A new study from Natixis Global Asset Management found that retail investors are “extraordinarily optimistic” about their investment prospects in 2015.
Eighty-two percent of investors surveyed by Natixis were satisfied with their returns in 2014, and more than half expect portfolios to perform even better in 2015. The investors surveyed said they need an average annual return of 10 percent to meet their financial needs, and 81 percent believe this is realistic expectation.
“American investors have gotten used to excellent stock market returns in the last few years, so their view of financial markets is notably positive,” said John Hailer, CEO of Natixis for the Americas and Asia, noting how the Standard & Poor’s 500 Index rose 13 percent in 2014.
The S&P 500 gained an average of 9.5 percent annually from 2005 to 2014, but that average was dragged down by deep losses during the global financial crisis. Hailer said that even though many investors still remember the impact of the recession on their portfolios, they still haven’t planned for another market setback.
Only 49 percent of investors have a financial plan despite reporting worries about U.S. politics and a global economic slowdown. Sixty-five percent said they struggle to avoid making emotional decisions during market shocks.
The good news for advisors is that the majority (87 percent) of investors, even among those who don’t already work with an advisor, believe in the value of professional financial advice. Eighty-three percent want strategies that offer a better balance between risk and return, and 76 percent want strategies to insulate their portfolio from market swings. More than half are willing to take on more risk in 2015 to reach their expected returns.
Most investors expect stocks to be the strongest asset class in 2015, but 68 percent said they want alternative strategies. More than half are already invested in alternative asset categories like hedge funds, private equity, commodities and long-short funds, and Natixis reported that millennial investors are the most likely to invest in alternatives.
