Surveys

Equities Remain Most Popular Asset Class In 2023 – Avaloq

Amanda Cheesley Deputy Editor 18 October 2023

Equities Remain Most Popular Asset Class In 2023 – Avaloq

Digital banking and wealth management technology provider Avaloq published results this week of a survey entitled “The Five Dimensions Of Investor Behaviour” that looks at investment trends and behaviour amongst investors in Europe and Asia.

Despite wealth managers recent tilt towards bonds, a new study by digital banking and wealth management technology provider Avaloq reveals that equities remain the most popular asset class overall.

According to the survey, 55 per cent of respondents say they hold equities. The total figure is largely in line with the firm’s 2021 (50 per cent) and 2022 (55 per cent) survey findings. Equities are a particular favourite in the three Asian markets surveyed, the firm said. Nevertheless, Benjamin Melman, global chief investment officer at Edmond de Rothschild Asset Management, said last week that they continue to be overweight in bonds compared with equities. See more here on wealth managers' move towards bonds.

Avaloq's survey was conducted over February and March 2023, showing responses from 3,000 mass-affluent, high net worth and ultra-high net worth investors from Germany, Hong Kong, Japan, Singapore, Switzerland, and the UK.

At the same time, Avaloq sees a trend towards alternative investments among investors. As an example, cryptocurrencies have continued to gain popularity, notably in Europe where 42 per cent of investors hold crypto (up from 31 per cent in 2021), despite recent turbulence, the survey reveals. Eighty-four per cent of respondents who currently invest in crypto do so via a crypto exchange and only 50 per cent via their bank or wealth manager, the firm added.

“The unabated appetite for crypto investing shows that investors continue to see it as a legitimate investment, despite recent headlines about exchange breakdowns and regulatory concerns,” Martin Greweldinger, co-chief executive officer at Avaloq, said. “Investors remain drawn to the potential returns and diversification benefits that cryptocurrencies offer,” he added.

Over a third of investors also describe their investment approach as balanced, mirroring the picture from the 2021 and 2022 surveys, the firm continued. Compared with 2021, there has been a shift of five percentage points from conservative and balanced approaches to fairly or very aggressive approaches, the survey shows. Investors’ risk appetite overall appears to be growing, as they realise that they need to take higher risks to generate comparable returns in this volatile investment environment. “Despite recent rate hikes, the low interest rate environment has remained a dominant theme in financial markets over the past few years. As a result, investors are accepting more risk in the hope of higher returns,” Greweldinger said.

“The advancements in technology have democratised the investment landscape, providing mass-affluent and even retail investors with easier access to a diverse range of sophisticated and potentially higher-risk investment opportunities,” he added.

The majority of investors surveyed also consult an industry professional, such as a financial advisor, to make decisions on how or what to invest in. Swiss investors are most likely to rely on a professional, the survey reveals. Investors in Germany and Japan rely on news stories and articles as their main source of information.

In the overall sample, news stories are the second most popular source of information. Among investors who rely on the news to make their decisions, 36 per cent state that they struggle to identify trustworthy sources. Additionally, the sheer volume of information available and lack of time were also cited as major challenges, the firm said.

In the survey, 57 per cent of respondents were mass-affluent (with investable assets of  $250,000 to $1 million) while 37 per cent fell within the high net worth (HNW) segment (with investable assets of $1 million to $50 million) and 6 per cent within the UHNW bracket (with investable assets above $50 million). 

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