Ahead of the fourth quarter, Skandia International surveyed over 450 offshore investment advisers to gauge their opinions about investor confidence. The findings have been published in their Offshore Adviser Confidence Barometer; they reveal that the general consensus of adviser opinion is focused quite acutely on the risks of contagion. Additionally, the survey’s findings reveal that investor confidence has fallen.
These findings tie in absolutely with our own; we’ve been speaking to a small number of European based offshore financial advisers, and a broad cross section of Expatra readers, who are all on our opted in list of investors. The investors we spoke to ranged from those who have been seeking a very risk averse approach to saving their wealth in recent years, to those who have been comfortable directly trading their own money.
And whilst Skandia attempt to positively spin their findings, suggesting that investors are committed to the long-term and that confidence in a number of local markets remains strong, our own findings show that actually expat investor confidence is at an all time low.
According to the IFAs we spoke to, investment commitment has fallen off very sharply, and an increasing number of expats are seeking to consolidate their positions and maintain a ‘hold’ or a ‘wait and see’ attitude as the economic state of the wider world emerges.
Investment confidence is therefore at an extremely low ebb at the moment. Risk averse expatriates report that they’re finding it harder than ever to keep abreast of the real cost of inflation, because interest rates on relatively plain vanilla savings solutions are so poor. As the cost of living soars in many of the most popular expatriate destinations, those who cannot keep up with inflation are seeing the real value of their wealth eroded on a week-by-week basis.
Those who have wanted to grow their wealth a little more aggressively, and who have sought to utilise a mixed investment approach in the past, universally report having had their fingers burned this year. Some reported drastic losses on even the simplest tracker type funds this year.
Those who have had their wealth invested for maximum growth potential now face the reality of a long, slow slog back to square one – because their gains have been slashed in recent months as their higher risk investment approaches have failed them.
We can concur absolutely with some of Skandia’s findings, for example ‘contagion’ is the buzz word among IFAs as they suggest, whilst a strong consensus of opinion among investors is that we haven’t seen the worst, we haven’t seen the bottom and there’s no telling how long this economic uncertainty and fiscal insecurity will last.
One investor with whom we corresponded and who’s bucking the current trend, advised that: “the only way to make any money at the moment is to short the market – otherwise the best you can do is stand still, and even that requires monumental effort.”
Among Expatra’s own staff the feeling is that we haven’t had the full disclosure of Europe’s fiscal woes, neither have we seen what America’s still hiding just in terms of its cities’ debts. Therefore who knows how well even the seemingly most stable economies will weather the fallout from this unprecedented economic storm.
For investors this means uncertainty and stress. And whilst Phil Oxenham, marketing manager at Skandia International reports: “The fact that the vast majority of clients are waiting for the storm to pass rather than giving in and selling their investments shows that investors, with support from their advisers, are taking a pragmatic approach, recognising that successful investing can only be achieved over the longer term.” We would suggest that investors who want to have any chance of recovering their losses know that they will have a long haul ahead of them before they see a recovery in their portfolios.
In other words, investors have little choice but to hold for the long-term – the only other option is cutting losses. And that’s not a palatable option for anyone.