SOURCE: Manulife

Manulife

March 04, 2015 20:30 ET

Asian Investors Riding Their Luck for Good Investment Returns -- Manulife

HONG KONG, CHINA--(Marketwired - Mar 4, 2015) -

  • Almost half of Asia investors happy with recent investment returns; many put it down to "pure luck"
  • Majority of China investors attribute good investment performance to skill
  • A third of dissatisfied investors blame underinvesting or unexpected events

Pure luck proved a winning formula for more than a quarter of Asia investors who were happy with their investment returns last year, a percentage that illustrates how instincts can serve investors well, but at the same time points to many using a high-risk investment strategy, according to closer analysis of findings in a Manulife survey.*

Almost half (49 percent) of Asia investors were happy with their investment performance in 2014. Indonesian and Filipino investors were the happiest, at 81 percent and 76 percent respectively, while investors in Japan were the least satisfied (31 percent). Yet a surprisingly high percentage of these investors rode their luck when approaching investments, thereby potentially exposing them to a level of risk far higher than their normal risk threshold. Investors in other Asian territories also relied on luck, albeit to a lesser degree.

"Relying on luck is typically a highly risky investment strategy," said Michael Dommermuth, Manulife Asset Management's newly appointed Head of Wealth and Asset Management, Asia. "After several years of relative calm in many global markets, uncertainty over interest rates, geopolitical tension, slower economic growth in China and the prospect of continued recession in the eurozone mean that renewed volatility is likely to continue in 2015. Luck will usually do little to insulate investors from the degree of market risk implied by these market forces."

An earlier Manulife survey found that about three-quarters of investors in the Philippines and Indonesia, and two-thirds of investors in Japan have a low tolerance for risk -- defined as a fluctuation on investment returns of less than 10 percent. Yet, of those investors happy with their returns, in Indonesia 54 percent cited pure luck, while in the Philippines it was 42 percent and Japan 38 percent.

Mainland China Investors Focus on Rebalancing Portfolios

While pure luck was the most eye-catching stated driver behind those pleased with their investment performance, a greater number of investors attributed it to judgment and skill. They said the secret of their success was a planned approach, comprising proper rebalancing of the portfolio (35 percent), better diversification (29 percent) and carefully managed risk exposure (28 percent).

For Chinese investors (59 percent), rebalancing their portfolios was key. More than any of their peers in the region, mainlanders don't rely on "pure luck", with only 11 percent saying luck was a factor. In Taiwan (54 percent) and Hong Kong (41 percent), portfolio diversification was noted as a major reason for their respective investors' positive views of their investment performance. In Singapore (39 percent), portfolio diversification was considered central as well.

"It is heartening to see that so many investors in Asia continue to rely on careful portfolio management to drive the potential for returns," said Dommermuth. "We firmly believe that carefully selecting a diversified range of investments across asset classes and geographies can be a good way to maximize investment returns across market cycles."

Unexpected Events and Underinvestment Cause Investment Dissatisfaction

While a majority of investors in Japan relied on luck for good investment performance, it also had the largest percentage of investors dissatisfied with their investment returns, at 27 percent - well above the average.

The two main causes of dissatisfaction region-wide were unexpected market events that impacted returns (32 percent), and being insufficiently invested (also 32 percent). In Japan, almost half (49 percent) of investors wished they had invested more. It was in Hong Kong (35 percent), Taiwan (43 percent) and, most noticeably Singapore (52 percent), where unforeseen events had the biggest impact.

According to Dommermuth: "It's not surprising that investors in Japan were displeased with their investment return given the low interest-rate environment and high allocation to cash. Also, renewed volatility means that investors are likely to continue to face unexpected market events in the year ahead. In our opinion, an asset allocation portfolio, which actively rebalances exposure to equities and bonds and various global markets to reflect current market conditions, can be a suitable investment strategy for these conditions. It can help to efficiently minimize risk exposure while still delivering the potential for capital gains or even a recurring income stream."

1 Survey for the Manulife Investor Sentiment Index, 1Q 2014

For more information on the Manulife Investor Sentiment Index in Asia, please visit www.manulife-asia.com.

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Percentage of investors satisfied with 2014 investment returns due to "pure luck"
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Top reasons why investors were dissatisfied with 2014 investment returns
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*About Manulife Investor Sentiment Index in Asia
Manulife's Investor Sentiment Index in Asia (Manulife ISI) is a quarterly, proprietary survey measuring and tracking investors' views across eight markets in the region on their attitudes towards key asset classes and issues related to personal financial planning. The Index is calculated as a net score (% of "Very good time" and "Good time" minus % of "Bad time" and "Very bad time") for each asset class. The overall index is calculated as an average of the index figures of asset classes. A positive number means a positive sentiment, zero means a neutral sentiment, and a negative number means negative sentiment.

The Manulife ISI is based on 500 online interviews in each market of Hong Kong, China, Taiwan, Japan, and Singapore; in Malaysia, Indonesia and the Philippines it is conducted face-to-face. Respondents are middle class to affluent investors, aged 25 years and above who are the primary decision maker of financial matters in the household and currently have investment products.

The Manulife ISI is a long-established research series in North America. The Manulife ISI has been measuring investor sentiment in Canada for the past 15 years, and extended this to its John Hancock operation in the U.S. in 2011 and Asia in 2013. Asset classes taken into Manulife ISI Asia calculations are stocks/equities, real estate (primary residence and other investment properties), mutual funds/unit trusts, fixed income investment and cash.

This material, intended for the exclusive use by the recipients who are allowable to receive this document under the applicable laws and regulations of the relevant jurisdictions, was produced by and the opinions expressed are those of Manulife or any of its affiliates as of March 2015 and are subject to change based on market and other conditions. The information and/or analysis contained in this material have been compiled or arrived at from sources believed to be reliable but Manulife or any of its affiliates does not make any representation as to their accuracy, correctness, usefulness or completeness and does not accept liability for any loss arising from the use hereof or the information and/or analysis contained herein. The information in this document, including statements concerning financial market trends, are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Manulife or any of its affiliates disclaims any responsibility to update such information. Neither Manulife or any of its affiliates or its affiliates, nor any of their directors, officers or employees shall assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained herein. All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, investment or legal advice. Clients should seek professional advice for their particular situation. Neither Manulife or any of its affiliates or representatives is providing tax, investment or legal advice. Past performance does not guarantee future results. This material was prepared solely for informational purposes, does not constitute an offer or an invitation by or on behalf of Manulife or any of its affiliates to any person to buy or sell any security and is no indication of trading intent in any fund or account managed by Manulife. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Unless otherwise specified, all data is sourced from Manulife.

Issued in Hong Kong by Manulife and its affiliates.

About Manulife

Manulife is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. We operate as John Hancock in the US and as Manulife in other parts of the world. We provide strong, reliable, trustworthy and forward-thinking solutions for our customers' significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We also provide asset management services to institutional customers. Funds under management by Manulife and its subsidiaries were approximately US$596 billion as at 31 December 2014. Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK. Manulife can be found on the Internet at manulife.com.

About Manulife Asset Management
Manulife Asset Management is the global asset management arm of Manulife, providing comprehensive asset management solutions for investors. This investment expertise extends across a broad range of public and private asset classes, as well as asset allocation solutions. As at 31 December 2014, assets under management for Manulife Asset Management were approximately US$277 billion.

Manulife Asset Management's public markets units have investment expertise across a broad range of asset classes including public equity and fixed income, and asset allocation strategies. Offices with full investment capabilities are located in the United States, Canada, the United Kingdom, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Thailand, Vietnam, Malaysia, and the Philippines. In addition, Manulife Asset Management has a joint venture asset management business in China, Manulife TEDA. The public markets units of Manulife Asset Management also provide investment management services to affiliates' retail clients through product offerings of Manulife and John Hancock. John Hancock Asset Management and Declaration Management and Research are units of Manulife Asset Management.

Additional information about Manulife Asset Management may be found at ManulifeAM.com.

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