Franklin Resources, Inc
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Global Investor Sentiment Survey 2013

Optimism is on the Rise

 

For our third annual Global Investor Sentiment Survey, we polled over 9,500 investors in 19 key global markets to learn how investors are reacting to market events and how recent developments have affected their outlook for the future. Is investor sentiment leaning bullish or bearish? Are investors expecting double-digit returns from their investments this year? And where do they see the best opportunities?

Explore our survey results below to find out.

Investor optimism on the rise

Following the gains seen in global equity markets last year, over 60% of investors expect their local stock market to be up in 2013. Investors residing in emerging markets are particularly optimistic about the year ahead, as 66% expect their local stock market to produce gains.

Investors see double-digit returns ahead

Investors’ return expectations also point to rising optimism — especially among those residing in emerging markets. Investors in these markets expect an average 12% return from their investments in 2013. Compare this to the 7% return those in developed markets are expecting this year. Over the next ten years, return expectations continue to increase. Investors residing in both developed and emerging markets are projecting double-digit returns in the coming decade, at an average of 10% and 18%, respectively.

European investors maintain a conservative outlook for 2013

This rising sense of optimism isn’t shared by all, however. Investors residing in Europe have a less cheerful outlook for the year ahead, possibly due to the Eurozone’s lingering debt crisis, which drove the region into a recession for the second time in 4 years in the latter-half of 2012.

Just 49% of investors in Europe believe their stock market will be up this year — the lowest among the regions surveyed. Europeans also have the most conservative outlook for their investment returns this year, at just above 6%.

Whether you see the glass as half empty or half full, now is a good time to talk to a financial advisor to ensure you’re positioned to take advantage of what lies ahead.

Investors Expect the Stock Market to Be Up in 2013

 

Important Information

Investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. Investments in emerging market countries involve heightened risks related to the same factors.

Risk aversion outweighs the opportunity for reward

Despite positive signs in global equity markets, investors appear to be more concerned with capital preservation than investment gains this year. When asked how they would change their investment strategy, 57% of investors responded with plans to become more conservative. Hong Kong stands alone as the only market in which a slight majority of investors, or 51%, plan to become more aggressive with their strategy this year.

Investors plan a more conservative approach in 2013

  • 40% of investors will be slightly more conservative taking on moderately lower risk to avoid potential losses.
  • 17% of investors will be much more conservative taking on significantly lower risk to avoid potential losses.
  • Just 31% of investors are open to taking on more risk for the potential of higher returns.

Risk tolerance varies by region

This year, many investors residing in Latin America are willing to take on more risk for the potential of higher returns, as 39% plan to become more aggressive with their strategy. On the other end of the spectrum, investors residing in Europe show the most aversion to risk, as just 21% plan to become more aggressive.

Most Investors See the Best Equity Opportunities Abroad

 

As investors try to avoid risk, they may be missing the bigger picture and unintentionally exposing their portfolio to other types of risks. A financial advisor can help you rethink how you assess risk and get you focused on the long-term.

Investors see opportunity abroad

As the world has become increasingly connected more investors have come to recognize the opportunities abroad. Two-thirds of investors believe the best equity and fixed income opportunities will be found outside their home country this year, with many investors favoring markets in Asia — especially for equities. Over the next ten years, investors believe opportunities abroad will continue to grow, with more than 70% expecting foreign opportunities to exceed those in their home country.

  • Equity: Among investors that believe the best equity opportunities can be found abroad, 42% believe Asia will provide the best opportunities in 2013.
  • Fixed income: Among investors that believe the best fixed income opportunities can be found abroad, the largest portion (28%) believes Asia will provide the best opportunities in 2013.

Most Investors See the Best Equity Opportunities Abroad

 

For some, there’s no place like home

Unlike their counterparts in other markets, investors residing in Australia and the U.S. don’t feel the need to look beyond their borders for opportunity. A majority of investors residing in these markets see the best equity and fixed income opportunities in their own countries this year and as such, plan to keep most of their assets close to home.

  • Australia: Investors residing in Australia plan to keep an average 81% of their assets at home in 2013
  • U.S.: Investors residing in the U.S. plan to keep an average 76% of their assets at home in 2013
  • Globally, investors plan to keep an average 66% of their assets at home in 2013

How global is your portfolio? Talk to a financial advisor about how you can take advantage of opportunities abroad.

Important Information

Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in the fund adjust to a rise in interest rates, the fund’s share price may decline. Investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. Investments in emerging market countries involve heightened risks related to the same factors.

The value of professional advice

In today’s connected world investors may need an expert to help them navigate the complex global investment landscape. In this environment, investors may not be in the best position to spot opportunities or identify risks. That’s why at Franklin Templeton, we strongly urge investors to work with a financial professional to develop a sound investment strategy.

Our survey results support this position and show that investors benefit from professional advice in a number of ways, including:

  • Greater geographical diversification
  • Greater willingness to seize opportunities in emerging markets
  • More optimism about reaching financial goals

Not currently working with a financial professional? Find an advisor in your area to learn how you can benefit from professional advice.

Survey Shows Investors Benefit from Professional Advice

 

Important Information

Investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. Investments in emerging market countries involve heightened risks related to the same factors.


Survey Methodology

The Franklin Templeton Global Investor Sentiment Survey, conducted by ORC International, included responses from 9,518 individuals in 19 countries: Brazil, Chile and Mexico in Latin America; Australia, China, Hong Kong, India, Japan, Malaysia, South Korea and Singapore in Asia Pacific; France, Germany, Italy, Poland, Spain and the UK in Europe, and the United States and Canada in North America. Survey respondents were between the ages of 25 and 65 in Latin America and Asia Pacific and 25 and older in Europe and North America. 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. Surveys were completed from January 14 to 25, 2013, in all countries.

Important Legal Information

Franklin Resources, Inc. is a global investment management organization operating as Franklin Templeton Investments. 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 including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Not all products or services may available in all jurisdictions. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in the fund adjust to a rise in interest rates, the fund’s share price may decline. Investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. Investments in emerging market countries involve heightened risks related to the same factors. Please consult with your financial advisor about the availability of services or products in your country.