Australian investors are looking to increase their allocation to active management over the next 12 months, according to a survey conducted by Franklin Templeton Investments.
As domestic and global economic results diverge, Australian investors and their advisers are seeking active strategies, the survey found.
Of the 100 survey respondents, 71 per cent indicated they were considering active management.
Only five per cent said they would increase allocations to passive management strategies.
Franklin Templeton's director of advisory services, Jim McKay, said investors are realising that active managers are better suited to “boost returns”.
“By engaging an active manager who is able to use all the resources at their disposal to stay on top of a rapidly evolving economy, investors are much better placed to achieve enhanced returns and reduced volatility on their investments in the long term,” Mr McKay said.
“As factors like geopolitical risk and the mixed bag of economic results in global markets contribute to investor nerves, there’s a growing realisation that active managers are better placed to take advantage of market inefficiencies and boost overall returns,” he said.
The survey found that 39 per cent of investors would like investment managers to adopt ‘outcome-orientated’ strategies in order to address investment challenges.
A further 26 per cent said they would like to see more options that protect portfolios from volatility, while 24 per cent said a diversified portfolio is the best way to mitigate future challenges.
“In a post-GFC environment, we are seeing investor preferences move towards a more tailored approach – the appetite is towards funds with distinctive styles and sophisticated strategies when it comes to aspects like risk management,” said Mr McKay.
“These are not options that investors can easily access as a part of passive strategies, so there is clearly a realisation that the singular pursuit of ‘low cost’ investment vehicles is not the best way to add overall value to a portfolio,” he said.
Investment organisations are not learning from their past experience when it comes to improving investment committee practices and governanc...
Half of Australian investment management professionals believe the coronavirus pandemic will trigger unethical behaviour in the industry, ac...