SOURCE: Franklin Templeton

Franklin Templeton

May 18, 2015 07:00 ET

Investors Show Greatest Interest in Investing Beyond Their Borders

Global Survey Finds Chilean Investors Surveyed Less Optimistic and Opting for More Conservative Strategies

 

Franklin Templeton Releases Results of 2015 Global Investor Sentiment Survey

SANTIAGO, CHILE--(Marketwired - May 18, 2015) - In its fifth year canvassing investors across the globe, the 2015 Franklin Templeton Global Investor Sentiment Survey polled over 11,500 investors in 23 countries across the Americas, Africa, Asia Pacific and Europe. One of the broadest surveys of its kind, respondents shared their views and current attitudes towards investing and their expectations for 2015 and the decade ahead.

The Chilean investors surveyed continue to recognize the investment opportunities that exist outside of their home country, a trend that the global survey has shown over the past five years. The Chilean investors who participated in the survey showed the greatest interest in investing abroad, with 85 percent believing the best equity opportunities exist beyond their borders. Also, 82 percent believe the best fixed income opportunities will be found outside of Chile.

Globally, more than two-thirds of respondents believe the best equity and fixed income returns will be found outside their home country, which echoes Franklin Templeton's 2013 and 2014 survey results.

Chilean investors surveyed think the best equity opportunities this year and over the next 10 years will be in Asia, followed by the U.S. and Canada.

Investor Perceptions, Concerns
Although a majority of the Chilean respondents (61 percent) expect the local market to finish the year with positive returns, their current market evaluation is slightly worse than last year's (6 percent down). This is not a surprise, as these Chilean investors show concerns about the state of the local economy, which was identified as their top investing concern (33 percent), followed by government fiscal policy (30 percent) and unemployment and the state of the global economy (both 27 percent).

When it comes to perceptions of past performance, the survey has consistently shown that investor perception often diverges from reality. When asked about 2014 stock market performance, 47 percent believed the Chilean market finished the year in positive territory. In reality, the stock market in Chile was down last year1, and just 34 percent of investors knew how their market actually performed.

"Investors are optimistic, but that may not be based on a solid understanding of the market's performance. It's more critical now than ever to really understand the importance of a globally diversified portfolio as we are likely to encounter some rough patches ahead," said Sergio Guerrien, Franklin Templeton's Director and country head for South America ex-Brazil.

Stocks Remain in Favor
For the second year in a row, real estate, stocks and precious metals continue to top investors' most favored asset classes. Sixty six percent of this year's survey respondents from Chile expect real estate to be among the top-performing asset classes in 2015. Stocks (47 percent) and precious metals (41 percent) round out the top three.

Looking at a longer investment horizon, the Chilean investors surveyed rank real estate (64 percent), precious metals (45 percent) and stocks (39 percent) as the top three performing asset classes over the next 10 years.

Expectations of these respondents on top-performing asset classes in 2015 and the previous year are the following:

     
Perceived Top-Performers 2014   Perceived Top-Performers 2015
1. Real estate - 69 percent   1. Real estate - 66 percent
2. Stocks - 44 percent   2. Stocks - 47 percent
3. Non-metal commodities - 42 percent   3. Precious metals - 41 percent
     

Risk Management Is Key
Stocks are clearly viewed as top performing both in the near term and long term; however these investors also view the asset class to be among the riskiest in 2015 and over the next 10 years. Forty percent of Chilean respondents chose stocks as one of the riskiest asset classes, with the US Dollar (48 percent) and the Euro (30 percent) rounding the top three in 2015. These top three hold steady looking out 10 years as well.

Given their views on the riskiest asset classes, an overwhelming number of the respondents in Chile (95 percent) ranked the importance of risk management expertise as somewhat to very important.

The majority of global investors who participated in the survey (55 percent) believe their investment strategy will be more conservative in 2015 and Chile is not an exception. Almost two thirds of the Chilean investors who responded (63 percent) are planning to adopt a more conservative strategy, nearly twice as many who will opt for a more aggressive one (34 percent). In spite of this, the majority of them are still optimistic about reaching their financial goals (88 percent); however, this number has decreased from 2014 (down 6 percent).

"Views of what constitutes risk vary within the industry, and it's important for investors to have a clear understanding of what risk means to them and how it impacts their portfolios," said Guerrien. "In today's volatile, low interest rate environment, investor sentiment is tempered by a sense of uncertainty, which may be keeping some from investing to support their long-term goals. In this scenario, investors can benefit from the perspective of a global asset manager with decades of experience navigating the world's markets."

Growing Interest in Alternatives
Our findings suggest that 58 percent of the Chilean investors surveyed do not know what alternative funds are. For those that do know, they generally see potential in alternative funds, with 58 percent seeing them as good investment opportunities in 2015. Additionally, more than one third of these investors are likely to invest in alternative funds with daily liquidity in 2015, while nearly half of them will do so over the next 10 years.

"Today's financial markets present a unique set of challenges. Caught between the anxiety induced by sharp declines during the financial crisis and uncertainty about the direction of the markets, many investors are looking for actively managed investment solutions from managers employing strategies that can help reduce volatility in unpredictable markets while seeking to provide attractive risk-adjusted returns, like alternative mutual funds which cover a variety of asset classes and strategies beyond traditional stocks and bonds and also provide with daily liquidity," said Guerrien.

Methodology
The Franklin Templeton Global Investor Sentiment Survey, conducted by ORC International, included responses from 11,508 individuals in 23 countries: Brazil, Chile and Mexico in Latin America; Australia, China, Hong Kong, India, Japan, Malaysia, South Korea and Singapore in Asia; France, Germany, Greece, Italy, Poland, Spain, Sweden, and the UK in Europe, South Africa, the UAE, and the United States and Canada in North America. Survey respondents were between the ages of 25 and 65 in Latin America, Asia (except for Japan) and South Africa and 25 and older in Europe, Japan, the UAE, Canada and the U.S. Respondents were required to own investable assets, such as stocks, bonds, mutual funds, etc. In addition, a minimum investable asset threshold was set for each country to ensure that the respondent had sufficient investments, providing a knowledge base from which to answer the survey questions. The survey was completed from February 12 to March 2, 2015, in all countries.

About Franklin Templeton
Franklin Templeton serves a wide array of institutional clients in Chile and throughout the region. Franklin Templeton is among the top mutual fund providers to the successful Chilean pension system. In addition, the company offers nine Luxembourg-registered SICAV mutual funds, which are registered in the Foreign Securities Register of the Chilean Superintendence of Securities and Insurance (Registro de Valores Extranjeros de la Superintendencia de Valores y Seguros de Chile), through a distribution relationship with LarrainVial, a leading Chilean financial services company. Franklin Templeton mutual funds have been investing in Latin America since the since the early 1980s, and today the company has offices in Mexico City, Buenos Aires, Sao Paulo and Rio de Janeiro.

Franklin Resources, Inc. (NYSE: BEN) is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 150 countries. Through specialized teams, the company has expertise across all asset classes - including equity, fixed income, alternative and custom solutions. The company's more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in 35 countries, the California-based company has more than 65 years of investment experience and over $880 billion in assets under management as of March 31, 2015.

For more information, please visit www.franklinresources.com/encuestaglobal-chile or connect with Franklin Templeton on Twitter (@FTI_Global). Read the Beyond Bulls & Bears blog featuring perspectives from Franklin Templeton investment professionals around the world and the Investment Adventures in Emerging Markets blog from Mark Mobius (@MarkMobius), executive chairman of Templeton Emerging Markets Group.

This material does not constitute investment advice or an invitation to apply for securities. Investors should seek professional financial advice and obtain a full explanation of any proposed investment before making a decision to invest. Investments involve risks. The value of investments can go down as well as up, and investors may not get back the full amount invested. Not all products and services available in all jurisdictions.

Copyright © 2015. Franklin Templeton Investments. All rights reserved.

1. Based on MSCI Chile Index, average annual return, Dec 31, 2014. Source: © Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

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