Australian investors are increasingly focusing on active management strategies as domestic and overseas results diverge, according to a survey by Franklin Templeton Investments.
Seventy-one percent of Australian respondents surveyed at Franklin Templeton’s recent Asia-Pacific investor forum say they are considering increasing their allocations to active management, according to Australia’s Financial Standard. Only 5 percent of investors say they are planning to increase allocations to passive management strategies while 24 percent say they will make no changes to their portfolio over the next 12 months.
Two thirds of respondents also describe their risk tolerance as ‘moderately aggressive’. A third of those surveyed cite low interest rates as the biggest challenge facing investors today while the same number point to ‘uncertainty in the global economic environment’.
At the same time, 39 percent cite ‘outcome-oriented’ strategies as a particularly important means for investment managers to serve clients in the current market. A quarter (26 percent) say they want more focus on providing options to protect portfolios from volatility and 24 percent say they want to see a ‘diversified approach’ in current market conditions.
‘The survey data indicates that investors are increasingly turning to active management over a generalist approach to address the challenges of a volatile global economy,’ Franklin Templeton’s director of advisory services, Jim McKay, is quoted as saying in the Financial Standard. ‘As factors like geopolitical risk and the mixed bag of economic results in global markets contribute to investor nerves, there’s a growing realization that active managers are better placed to take advantage of market inefficiencies and boost overall returns.’
In July last year, a study from Australian financial services and information firm Rainmaker Group showed that funds in Australia devoted to index strategies rose 28 percent in the 12 months through March 2014. The increase brought funds devoted to index strategies to a record high of 19 percent of the funds management market.
