By Jayson Forrest - Managing Editor  - IMAP Perspectives

In line with their subdued market outlook, Australians are shifting their investing priorities. When asked to describe their main investment objective over the coming 12 months, fewer investors are aiming to maximise capital growth (21 per cent cite this, down from 26 per cent). Instead, more investors say their main goal will be to protect their assets and income from market falls (15 per cent, up from 11 per cent).

 “More investors are prioritising capital preservation and generating a stable income stream. To effectively achieve these priorities, many realise they need a diversified portfolio, which has led to the rising adoption of managed investment products,” Choi said.

 “Across the range of managed investments, Australian investors currently allocate the largest proportion of their total portfolio to unlisted managed funds (7 per cent, on average), while ASX-listed investments, such as ETFs and LICs, are gaining popularity (both 4 per cent, up from 3 per cent in 2018).”

 According to Choi, users of managed investments do not limit themselves to one single managed product, typically holding at least two.

 “However, cannibalisation between managed investments is limited, as investors most often finance these investments using cash or through the sale of direct equities – not by reducing their holdings in other investments,” he said.

The Investment Trends research also discovered that responsible investing is gaining traction, as more Australians seek to align their ethical, environmental, social and corporate governance (ESG) principles with the investments they hold.

 Currently, three in 10 investors say they consider ESG factors when selecting (or avoiding) certain investments. A further 14 per cent intend to start doing so in the future, and 19 per cent are interested to learn more.

“There is strong appetite for investments that demonstrate good ESG standards among Australians - both young and old. Older, wealthier investors place greater importance in good corporate governance standards when selecting investments, while the younger generation are more likely to be attracted to companies that demonstrate ethical, social and environmental values,” Choi said.

While more ESG-centric products are being launched at pace, it is important for providers to understand that the priorities of Australians are highly nuanced across the many facets of ESG. There is no one-size-fits-all approach, and providers will do well to understand the evolving needs of the retail investing population.” said Choi

The 14th edition of the Investment Trends Investor Product Needs Report is based on a survey of 7,933 Australian investors concluded in September 2019.