While optimistic on equities, investors are increasingly concerned about inflation, interest rates and the economic slowdown.
Australian investors remain positive on the outlook for capital gains and yields from the local share market despite growing concerns about inflation and other major issues.
Research conducted by Investment Trends found that a quarter of investors are now worried about inflation, up from 11 per cent a year ago, while 47 per cent said they were worried about the economic slowdown, up from 21 per cent.
“Australian investors remain strongly bullish on domestic equities despite the dizzying highs reached in 2021,” said Investment Trends head of research Irene Guiamatsia.
“More than a third see domestic equities as the number one asset type for generating yield in the current low-rate environment, followed by international equities and property.”
The proportion of investors concerned about interest rates surged from 4 per cent to 24 per cent, while 28 per cent are worried about property prices versus 15 per cent a year earlier.
Investment Trends found that ETFs and cryptocurrency had both seen increased adoption and portfolio allocation during the past year.
Meanwhile, investors also increased exposure to property in their portfolios while decreasing cash-related investments, direct shares and managed funds.
“There is also a strong ESG thematic overlaying these changing trends in investor behaviour – close to one in two investors report considering ESG principles as part of their decision making during the reporting period,” added Ms Guiamatsia.
Investors have called for greater information on the performance and future outlook of their investments in addition to additional investment opportunities.
“Looking ahead, investors plan to stick to what they perceive to be the winning formula in their quest for capital growth – direct shares, ETFs and increasingly, cryptocurrencies,” Ms Guiamatsia said.
The average capital gains expectations for the All Ords was found to be 4.3 per cent in July-October last year after fluctuating between 0 and 8 per cent during the past 12 months.
A rise in the average yield expectations of investors from 3.0 per cent to 4.3 per cent was also identified by Investment Trends.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.