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Risk-Averse Investors Abandon the Chase for High ReturnsDES MOINES, Iowa --(Business Wire)-- An independent survey by CREATE-Research, commissioned by Principal Global Investors, has revealed a fundamental shift in the mind-set of investors. The priority for investors is now focused on adopting goal-oriented approaches that mitigate unrewarded risk, rather than chasing the highest potential returns. As markets continue to defy previously held investment logic, investors understandably remain cautious. This has led to an increased demand for strategies tailored to take account of investor concerns and minimize unrewarded risk exposure. "We are seeing investors operate with more caution. Income and risk are more important than high returns. Goal-oriented investing is the major theme with investors today," said Barb McKenzie, senior executive director and chief operating officer of Principal Global Investors. The report notes that baby boomers are retreating from their previous risk-taking mode, and now favor a high probability of certainty over a low probability of high returns. "We see this in their selection of actively-managed, income-producing funds," said McKenzie. "Fewer and fewer investors are interested in tactically allocating through purely passive products today. Beta is unpredictable and investors crave predictability and income." This shift, a by-product of a sustained low rate environment, marks a fundamental change in investor attitudes rather than a short-term trend. This fundamental change in attitudes can be seen in the behavior of all four different investor groups:
"While the investment environment remains challenging, investors want two things: low-cost options to meet their perceived needs and assets that can deliver specific goals," said Professor Amin Rajan, CEO of CREATE-Research and author of the CREATE series. "The latter includes capital growth, regular income, inflation protection and capital conservation. This is the age of goal-oriented inveting." Key global trends in asset allocation and investor preference for certain asset classes that have developed between 2012 and 2014, include: DB investors
DC investors
Retail investors
High Net Worth investors
Principal Global Investors is an investment solutions provider catering for all four investor groups. The full 2014 report, Not All Emerging Markets are Created Equal and the asset allocation paper, Asset Allocation: No Longer One Size Fits All, are both available at: create.principalglobal.com and www.create-research.co.uk.
About CREATE-Research
About Principal Global Investors
About the Principal Financial Group 1 As of June 30, 2014. 2 Principal Global Investors is the asset management arm of the Principal Financial Group ® (The Principal ®) and includes the asset management operations of the following subsidiaries of The Principal: Principal Global Investors, LLC; Principal Real Estate Investors, LLC; Principal Enterprise Capital, LLC; Liongate Capital Management LLP; Spectrum (News - Alert) Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors; Edge Asset Management, Inc.; Morley Financial Services Inc.; Finisterre Capital, LLP; Origin Asset Management, LLP; Principal Global Investors (Europe) Limited; Principal Global Investors (Singapore) Ltd.; Principal Global Investors (Australia) Ltd.; Principal Global Investors (Japan) Ltd.; Principal Global Investors (Hong Kong) Ltd.; CIMB-Principal Islamic Asset Management Sdn. Bhd.; and the majority owned affiliates of Principal International, Inc. Assets under management includes assets managed by investment professionals of Principal Global Investors under dual employee arrangements with other subsidiaries of The Principal and assets managed in accordance with investment advice provided by Principal Global Investors through the delivery of a model. 3 "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group. 4 As of June 30, 2014. Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20140922005903/en/ |