The inaugural State Street Center for Applied Research's The Influential Investor - How Investor Behaviour is Redefining Performance found that more awareness of misaligned interest amongst investment providers, governments and markets has influenced institutional and retail investors to make decisions that are not always aligned with their stated goals.
"While investors have never been as aware of their micro and macro environments, they are exhibiting behaviours that are divorced from their stated investment objectives," State Street Center for Applied Research global head Kelly McKenna said.
This includes a majority of retail investors who believe aggressive investment is necessary for retirement and yet 31 per cent of their assets are in cash.
Meanwhile institutional investors have shown an increased appetite for alternative strategies however the majority admits they struggle with the complexities of these asset classes.
Other factors that influence investor decision making are major economic trends such as the increase of national debt worldwide and a rise in systemic risk.
National financial reforms have also made investors nervous, with 64 per cent believing that changes to regulation will not address current problems and that additional costs will be passed onto them.
State Street has said that industry reforms have led to a changing definition of "performance" and a need to reshape investment management.
"The investor's view of value is now more complex and reflects his/her own personal blend of strategies and objectives," Center for Applied Research global head of research Suzanne Duncan said.
"In today's investment reality, the investor is the benchmark when it comes to defining performance."
