"Domestic and Foreign Investors Expect an Average Annual Return of 10% Despite COVID-19"

'Schroder Global Investor Study 2020' Announcement

[Asia Economy Reporter Minji Lee] Despite the uncertainty caused by the novel coronavirus disease (COVID-19), investors worldwide expect an average annual total return exceeding 10% over the next five years.

On the 24th, Schroder Investment Management announced that the results of the 'Schroder Global Investor Study 2020,' conducted in April this year, showed this trend. The survey was conducted with over 23,000 participants from 32 countries, including the Korean market, the United States, France, the Netherlands, Russia, and Brazil. The respondents were limited to investors planning to invest more than 100,000 euros (approximately 13 million KRW) within the next year and who have investment experience within the past 10 years.

"COVID-19 will end within 6 months to 2 years"… Optimism Prevails

According to the survey results, global investors responded quickly to the COVID-19 pandemic situation while showing optimistic reactions regarding its negative economic effects. Seventy-eight percent of investors revised their investment portfolios in February and March, when the COVID-19 outbreak became a pandemic, and five out of ten respondents said they think about their investment status at least once a week. This figure represents a 14 percentage point increase compared to before the COVID-19 outbreak. Additionally, 76% of domestic investors reported thinking about their investments at least once a month.

In contrast, when asked, "How long will the negative impact of COVID-19 last?" 21% answered that it would be prolonged for more than two years. Sixty-six percent of respondents believed the economic situation caused by COVID-19 would end within a short period of 6 months to 2 years (33% for 6-12 months, 33% for 1-2 years). Only 6% of investors expected it to continue for more than four years.

Investors Expect Over 10% Returns Over the Next 5 Years

This optimistic outlook is also reflected in responses to the question about 'expected returns.' Investors answered that they expect to achieve a 10.9% return over the next five years. Domestic investors forecasted a slightly lower 10.15%. The region with the highest expected performance was the Americas, where investors anticipate an average annual return of 13.2% over the next five years. Conversely, European investors expected an average return of 9.4%, and Japan was projected to have the lowest return at 5.96%.

Among domestic investors, 85% revised their investment portfolios after the COVID-19 outbreak, but only 32% expressed concerns about short-term investment value decline (5% high, 27% moderate). Furthermore, domestic investors expected the negative economic impact of the COVID-19 issue to last approximately 1.91 years. Accordingly, they lowered their income expectations for this year and forecasted an investment return of 7.6%.

Due to ongoing economic uncertainty, domestic investors were found to require a medium to high level of financial knowledge. The sources for acquiring related knowledge were the investors themselves (58%), independent financial advisory firms (54%), and financial institutions (52%), in that order. Going forward, investors expressed a preference to obtain related information through financial institutions or independent financial advisory firms.

Jung Eun-soo, CEO of Schroder Investment Management, stated, "A noteworthy point in this survey is that both domestic and international investors are concerned about the current situation but, based on the learning effect acquired through experiencing the stock market over the past 10 years, they judged that the negative situation will not last long. However, since it is uncertain when the COVID-19 uncertainty will be resolved, it is important to accurately understand the current status of one's investment assets and focus on long-term investment goals."

This content was produced with the assistance of AI translation services.