Investors find less to smile about

By Phil Boeyen, ShareChat Business News Editor

Monday 29th January 2001

Investors are growing decidedly more pensive according to the latest ASB Bank investor confidence survey.

The survey for the last quarter of 2000 shows the number of people who believe their returns in the coming year will decline has almost doubled compared with a year ago.

Investor confidence is defined as the percentage difference between investors who expect their returns to improve and those who think their returns will decline.

At the beginning of last year 32% of investors believed their net returns would improve but that has now fallen to just 24%.

At the same time the proportion of people who believe their returns will decline has risen from 11% to 22%.

The net difference between the two levels is 2%, compared to a net 7% who expected improved returns in the September 2000 survey.

ASB investment manager, Roger Perry, says this shows investors' confidence is now in the balance.

"With the net difference between these two groups just 2%, it shows that increasingly investors see the modest returns of the past year continuing."

The survey, which covers 600 investors nationwide, shows managed funds remain the favoured form of investment with 24% of respondents, almost identical to the previous quarter of 25%.

"During the difficult investment conditions of last year, diversified managed funds were able to help shelter investors from some of the worst declines in sharemarkets," says Mr Perry.

Investors are also continuing to anticipate a tough time ahead in property markets according to the survey, with only 13% of investors expecting residential investment property to provide the best returns in the next 12 months - the lowest level since the survey began two years ago.

"Residential investment property isn't as popular as it has been. We have had an overhang of supply, and little new demand from net migration. In this environment, it is unlikely that a fall in interest rates will re-ignite this market.

"The next 12 months will be an important time for investors. Returns from investment could well continue at modest levels for some time yet."

Mr Perry says it is important that investors don't react by chopping and changing their investments, possibly taking unreasonable risks, in the search for higher returns.

ASB is a subsidiary of Australia's Commonwealth Bank.

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