Nearly Half of Investors Worry About Market Volatility

A survey released by Natixis Global Asset Management found nearly half of American investors fear losing money due to market volatility.

The Natixis U.S. Investor Insights Survey found that almost 47% of investors worry about losing money due to market volatility, potentially limiting what they invest in the market. Yet a significant portion of investors – about four in 10 – are not interested in alternative products and strategies that could potentially diversify portfolio returns.  

The survey also found 80% of investors believe the financial crisis is continuing to change the investment landscape, and 66% say they have changed their expectations about future investment returns.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

While investors recognize the importance of understanding risk and diversification, few understand alternative investments, which can help stabilize a portfolio and diversify returns throughout periods of market turbulence, Natixis said.

Half (49%) of U.S. investors said they understood their portfolio’s risk “moderately” or “very well,” compared to a small percentage of investors (4%) who said they don’t understand it in detail.

Seven in 10 said they understood alternative investments “only a little” or “not well at all,” and only one in 25 said they understood them “very well.” More than half (53%) say they don’t understand how they work, and more than 40% even admit to having no idea of what alternatives are.

Even among high-net-worth investors, who compose the bulk of those eligible to invest in many alternative products, just 7% say they understand alternatives “very well,” and one in three (36.5%) say they don’t understand these instruments.

According to the Natixis survey, a majority of investors (63%) say they will invest only in products with which they are familiar, and two-thirds (69%) say they need to learn more about alternatives before investing in them. Nearly half (44.9%) said the greatest barrier to considering them for their portfolio is a lack of “enough information about them.” A significant number of investors are simply not willing to make any allocation to alternative investments, including more than a quarter of emerging high-net-worth investors (with $500,000 – $1 million in investable assets) and nearly a quarter (24%) of high-net-worth investors.

The Natixis Global Asset Management U.S. Investor Insights Survey was conducted by CoreData Research and surveyed 463 American adults. Two surveys were conducted, in May and July 2011.

«