Investors Worried About Reaching Retirement Goals, but Paralyzed by Fear of Losses in Volatile Markets

  Investors Worried About Reaching Retirement Goals, but Paralyzed by Fear of
  Losses in Volatile Markets

In rising markets, three in five still holding their current levels of cash
investments, according to Natixis Global Asset Management study

Business Wire

BOSTON -- October 17, 2012

Four in five (83%) U.S. investors worry they won’t be able to meet their
retirement income goals, and 77% are concerned about outliving their assets in
retirement. While they know they need more assets, 53% say their fear of
losing money due to market volatility limits what they invest, and 58% say
they will take on only minimal investment risk, even if it means sacrificing
returns. These are among the findings of a new study of 702 individual
investors commissioned by the Durable Portfolio Construction Research Center
of Natixis Global Asset Management, the world’s 13^th largest asset manager.^1

Investor fear is driven by the past decade’s market volatility:

  *Seven in ten investors say that volatility has eroded their confidence in
    the markets (71%) and reduced their expectations for future investment
    returns (70%).
  *Eight in ten investors are worried about a wide range of other economic
    and policy issues, including consumer confidence (89%), higher taxes on
    investment (88%) and earned (85%) income, the European debt crisis (87%)
    and political uncertainty due to this year’s elections (85%).
  *Just 28% say they are “highly confident” in their portfolios’ ability to
    manage volatility, and 53% agree that stability in volatile times is their
    top investing priority.
  *57% say they are not reducing the cash investments in their portfolios.

“Individual investors are concerned about achieving their long-term financial
goals. They recognize that they need to grow their savings, but they are
paralyzed by fear and uncertain about how best to generate returns or protect
principal in today’s volatile markets,” said John T. Hailer, chief executive
officer of Natixis Global Asset Management in the Americas and Asia. “They
would like to try new ways of investing, but they would also like to sleep at
night. There are strategies that can help investors manage risk and create a
durable portfolio, but investors don’t yet know enough about them.”

Investors are willing to re-evaluate traditional asset allocations

Investors are willing to look to new asset allocation and diversification
strategies to address their fears. Nearly seven in ten investors (69%) agree
that it is time to replace traditional techniques with new approaches.
Three-quarters (75%) say the traditional portfolio allocation with 60% in
stocks and 40% in bonds is no longer the best way to pursue returns and manage
risk.

Many investors already are prepared to look at new ways to build portfolios.
Four in five (85%) say it is important to have different types of investments
in their portfolios, including 54% who say it is “very” important. In fact,
nearly half (46%) say they regularly consider whether an investment will
generate returns that are uncorrelated to the markets.

“Building a durable portfolio is not only about capital allocation; it’s also
about risk allocation. Investors need to start by looking at potential risks
embedded in their existing equity and fixed income investments, and then
consider strategies such as alternative investments – including hedging
strategies, commodities, currencies and managed futures – to control
volatility while still having the ability to achieve their goals for returns,”
said Hailer.

Financial advisors can provide needed guidance to investors

Although more than half of investors (52%) say they are interested in
investment products that are unrelated to the performance of the broader
markets, only two in five (39%) currently invest in alternative investments.

The biggest barrier to participation in alternative investments is a lack of
knowledge. Nearly seven in ten (68%) investors say they invest only in
products they understand, and 48% say they have little or no understanding of
alternative investments. Nearly two-thirds (64%) say they need to learn more
about alternatives before they would consider investing in them.

Financial advisors are best-positioned to help investors become comfortable
with alternative investments and other new strategies. Half of investors (51%)
said they would consider alternative investments for their portfolios if their
advisors recommended them. However, only 35% of investors say they have
discussed alternatives with their advisors.

Investors are increasingly willing to engage their advisors, with 62% agreeing
that they are more interested in discussing risk with their advisors than ever
before and 59% saying that they are revealing their expectations to their
financial advisors more than before.

“Market volatility is likely here to stay, and investors need portfolios that
can help them achieve their goals whether markets are moving up or down.
Financial advisors have an important role to play in educating their clients
about how to build durable portfolios that can smoothly navigate this risk and
volatility, perform in both up and down markets and help investors achieve
their goals for retirement,” Hailer said.

For more information from the Durable Portfolio Construction Research Center,
see durableportfolios.com.

Methodology

The online quantitative survey of 702 individual investors was conducted in
May and June by CoreData Research. The U.S. study was part of a wider survey
of 5,319 individual investors in 14 countries in Asia, Europe, South America
and the Middle East, as well as Australia, South Africa and the U.K. A copy of
the global survey highlights is available at ngam.natixis.com/pressroom.

About Natixis Global Asset Management, S.A.

Natixis Global Asset Management, S.A. is one of the 15 largest asset managers
in the world based on assets under management.^1 Its affiliated asset
management companies provide investment products that seek to enhance and
protect the wealth and retirement assets of both institutional and individual
investor clients. Its proprietary distribution network helps package and
deliver its affiliates’ products around the world. Natixis Global Asset
Management, S.A. brings together the expertise of multiple specialized
investment managers based in Europe, the United States and Asia to offer a
wide spectrum of equity, fixed-income and alternative investment strategies.

Headquartered in Paris and Boston, Natixis Global Asset Management, S.A. has
assets under management totaling $711 billion (€560 billion) as of June 30,
2012.^2 Natixis Global Asset Management, S.A. is part of Natixis. Listed on
the Paris Stock Exchange, Natixis is a subsidiary of BPCE, the second-largest
banking group in France. Natixis Global Asset Management, S.A.’s affiliated
investment management firms and distribution and service groups include:
Absolute Asia Asset Management; AEW Capital Management; AEW Europe;
AlphaSimplex Group; Aurora Investment Management; Capital Growth Management;
Caspian Private Equity; Darius Capital Partners; Gateway Investment Advisers;
H2O Asset Management; Hansberger Global Investors; Harris Associates; IDFC
Asset Management Company; Loomis, Sayles & Company; Natixis Asset Management;
Natixis Multimanager; Ossiam; Reich & Tang Asset Management; Snyder Capital
Management; and Vaughan Nelson Investment Management.

^1 Cerulli Quantitative Update: Global Markets 2012 ranked Natixis Global
Asset Management, S.A. as the 13th largest asset manager in the world based on
assets under management as of December 31, 2011.
^2 Assets under management (AUM) may include assets for which non-regulatory
AUM services are provided. Non-regulatory AUM includes assets which do not
fall within the SEC’s definition of ‘regulatory AUM’ in Form ADV, Part 1.

Diversification through the use of alternative investment strategies may
result in a profit or loss and can underperform during periods of strong
market performance. Investing in alternative investments can involve
heightened risks which include leveraging, short-selling, volatility of
returns, and other speculative investment practices.

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Contact:

NATIXIS GLOBAL ASSET MANAGEMENT
David Snowden, 617-449-2509
david.snowden@ngam.natixis.com