Macroeconomic concerns and volatility are undermining Italian investors' confidence in the markets, hindering their ability to make investment decisions, and creating apprehension about meeting savings and retirement goals, a survey by Natixis Global Asset Management has revealed.
Macroeconomic concerns and volatility are undermining Italian investors’ confidence in the markets, hindering their ability to make investment decisions, and creating apprehension about meeting savings and retirement goals, a survey by Natixis Global Asset Management has revealed.
Research on 740 individual investors in Italy, conducted by CoreData Research in May-June 2012, found that the three biggest worries for investors in the country are the unemployment level (74%), the national debt crisis (71%) and the possibility of receiving a wage or pension cut (70%).
Two-thirds of respondents said the high level of business taxes in the country is very concerning, as is a collapse of the Euro currency (65%) and the new fixed 20% tax on financial income (56%).
Two-thirds of investors said to be very concerned about the continuing slowdown in global economic conditions.
“Safety wins over performance for 58% of individual investors. More than half of Italy’s investors say that volatility has eroded their confidence in the markets,” said Antonio Bottillo, executive managing director of the firm in Italy.
More than two in five believed that volatility undermines their ability to achieve their investing and savings goals. As a result, 52% of Italian investors described themselves as only moderately confident that their current investment approach will provide them with steady income in retirement.
Moreover, Italian investors crave stability and have little appetite for risk, Natixis found, with fears of losing money due to market volatility as the main influence limiting their levels of investing and saving.
Four out of ten said it is time to replace traditional techniques with new approaches, and wealthier investors are even more likely to seek new investing ideas, although knowledge is still lacking.
Alternative investments such as hedge funds, currencies, real estate and alternative mutual funds can limit portfolio volatility or provide returns that are uncorrelated to the broader markets. Yet, only one-quarter of Italy’s investors say they are interested in these investment products.
“The survey shows a lack of knowledge of the role of alternative investments within a portfolio. Just 23% of are currently invested in alternative strategies, even though alternatives and other non-correlated investments may help investors combat the volatility that is keeping them from reaching their investment objectives,” Bottillo added.
Financial advisers can play a critical role in expanding Italian investors’ comfort zone for alternative investments. Nearly a third of investors said they would consider alternative investments for their portfolio if their adviser recommended them. Half said their adviser helps them understand the full range of investment options and the relationship between risk and return of their investments.