Investors remained cautious in 2012, focusing less on capital growth and more on income and driving investments into assets such as hybrid securities and exchange traded options.
The Investment Trends November 2012 Investor Product Needs Report found a 21 per cent increase in the number of investors holding hybrid securities in 2012 – a change upward from 61,500 in 2011 to 75,000.
Investors in exchange traded options increased by 25 per cent, from 28,000 to 35,000; those holding unlisted index funds jumped 58 per cent, from 17,500 to 28,000; and self-funding instalments were up by 41 per cent from 10,500 to 12,500 investors.
“2012 was another tough year for the Australian investment industry,” said Investment Trends’ principal, Mark Johnston.
“Investors remained fearful, with muted return expectations leading many to remain on the sidelines in cash.”
The continued shift in focus from capital growth to income shaped demand for different products such as hybrid securities, with self-managed super fund investors the key driving force.
Providers of cash accounts, term deposits and online savings accounts also did very well during 2012, with NAB’s UBank recording the highest levels of client satisfaction of any cash product provider, the report found.
“That said, they remain vulnerable in spite of this satisfaction since a large proportion of theirs are rate-chasers who are willing to switch providers if a better offer comes along,” Mr Johnston said.
Cash holdings also continued to build, defying falling cash rates and improving share market returns, the report found.
“Over the last few years, investors continued to hold and accumulate cash (and excess cash). When we ask them what would prompt them to invest this extra cash, increased confidence in the market and economy are the major catalysts cited,” Mr Johnston said.
“Since the end of 2012 though, we have seen a big spike in investor return expectations, which rose from 3 per cent per annum in September 2012 to 8 per cent per annum in February 2013, a 20-month high.”
The findings were based on a survey of 9,537 Australian investors from September to November 2012 and examined their attitudes, demand and usage of various investment products.
