Affluent Australians shifting to cash: Legg Mason

Older, more affluent Australian investors are moving into cash in increasing numbers, according to a new survey by Legg Mason.

The Legg Mason 2016 Global Investment Survey covered 5,370 investors, including 260 Australians, with more than US$200,000 of investable assets.

The research found that 84 per cent of Australian core investors (i.e. those aged 40 or older) described themselves as “somewhat” or “very” conservative.

That’s up from 77 per cent of people who identified themselves as conservative in last year’s survey, and it compares with a global average of 64 per cent.

At 28 per cent of total assets, cash has overtaken investment real estate (25 per cent) and domestic equities (22 per cent) as the dominant asset class.

“Older Australians continue to be less likely to invest internationally compared to other nations, with only 2 per cent strongly agreeing that they will focus on international investments this year, compared to the global average of 22 per cent,” Legg Mason said.

Australia was perceived as the second most attractive investment opportunity by affluent investors in 2016, ahead of Latin America, Asia, the UK and Europe.

“In addition, these investors regard Australia as having one of the lowest risks at 5 per cent as an investment destination, beaten only by Singapore (4 per cent),” Legg Mason said.

“The US is thought to carry greater risk, with 17 per cent of global respondents picking the US to have one of the highest investment risks.”

Australian millennial investors (those aged between 18-39) have a much higher allocation to property at 36 per cent – double that of the global average of 18 per cent.

“Australians rate real estate investments as considerably higher than the rest of the globe with 62 per cent of older Australians responding in the survey that real estate offered the best opportunity as an investment for this year, compared to the global average of 32 per cent,” Legg Mason said.