Legg Mason: ‘Italians are bond investors like nobody else’
Markets can change, along with investment strategies and interest rates, but Italian HNWI investors’ preference for bonds remains undiminished, according to a survey conducted by Legg Mason Global Asset Management.
The survey, conducted among HNWI investors aged 40 or older, revealed that 27% of the Italian average portfolio is allocated in fixed income: this is the highest percentage globally compared to 10% in Germany, 12% in France, 13% in the UK and China, 14% in Spain and 15% in the US.
The remainder of the average Italian HNWI portfolio is allocated in cash or cash equivalent (23%), equities (19%), investment real estate (16%), gold and precious metals (5%) and non-traditional investments (5%).
According to Italian investors, top asset classes that offer best opportunities over next 12 months are international stocks (50%), real estate and domestic stocks (43%), followed by international bonds (39%).
No other country considers bonds an asset class to invest in as much as Italy: it is the highest percentage not only in Europe (Spain 25%, France 24%, UK 23%, Germany 19%) but also globally (22%).
The Italian preference for bonds comes from “historic convictions built up over the years, when bonds were synonym to low risks and guaranteed returns”, said Marco Negri, country head Italy at Legg Mason Global Asset Management.
Investors, however, have to be aware that the current market scenario has changed significantly and it is characterized by strong volatility, Negri said.
“We are not saying that investors should keep away from fixed income, but they have to be able to select – among a wide offering – what bonds to include in their portfolios,” he said.
According to Italian investors, foreign nations represent best investment opportunities for 2016, with USA and India (40%), Australia (35%) and Japan (30%) topping the ranking.
Italian investors, instead, think that markets having the highest investment risks are: China (43%), Brazil (41%) and Russia (34%).
According to the survey, 30% of the respondents portfolio is invested outside Italy, which confirms the preference of Italian investors for “out of home” investments. Italy, thus, has the highest percentage in Europe for international investments, followed by the UK (17%), France (19%), Spain (16%) and Germany (15%).
63% of Italian investors say they will be more focused on international investments in the next 12 months compared to last year, even if some concerns emerge when investing internationally, regarding in particular global uncertainty (54%), currency risk (40%) and lack of transparency (23%).