Almost half of Australian retail investors claim to be diversified, according to a new ASX report – but a look at their portfolios tells another story.
Forty-six per cent of Australian retail investors say they are diversified, but the same investors only hold 2.7 asset classes in their portfolios on average.
The ASX Australian Investor Study 2017, prepared by Deloitte, surveyed 4,000 Australians who were representative of the Australian population.
The report found 46 per cent of investors claim their portfolios are diversified, 40 per cent believe they are not diversified and 15 per cent are 'unsure' whether they are diversified.
Those who claimed to be diversified held an average of 2.7 asset classes in their portfolios, and those who said they were not diversified held 1.6 assets on average.
"The investors that do not diversify may be doing so by choice or may be facing barriers to diversifcation, such as lack of access or they perceive the buy-in price to be prohibitive," said the report.
Shares, cash and property are still the most commonly held assets for investors – and the asset mix does not change significantly over time, said the report.
The report also found that only one in three retail investors understand the risk/return trade off.
"This may suggest that financial education is still lacking. It could also mean that financial advisers are struggling to connect with investors," said the report.
"The financial advice industry needs to consider new approaches to help investors better understand and navigate their investment journey."
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