Federated Investors, Inc. Survey May Signal the End of the Cautious Investor
- Findings indicate income is no longer a bonds-only strategy
- High-net-worth investors take a moderate approach to risk
PITTSBURGH, Sept. 16, 2013
PITTSBURGH, Sept. 16, 2013 /PRNewswire/ -- According to the 2013 Investor
Mindset Survey, high-net-worth investors will begin to make a decisive shift
in their portfolios over the next 12 months with 24 percent planning to invest
more in equities over the next year versus only 10 percent for bonds.
Investors have been cautious since the market events of 2008, but the survey
may signal the end of this cautious approach as nearly four times as many
high-net-worth investors plan to add equity and strategies balanced between
equities and fixed income to their portfolios as compared to bonds. In
addition to investors, the survey indicates that advisors are even more likely
than investors to be focused on equities as their recommended approach over
the next year.
Although a key driver for both high-net-worth investors and advisors is a
desire for consistent income, which historically meant a focus on bonds,
surprisingly, 48 percent of investors chose equity and balanced strategies as
"top of mind" when thinking of income, while only 30 percent of investors
This new willingness to try a more balanced approach is reflected in
investors' responses when asked to describe their investment style. An
overwhelming 84 percent of investors described themselves as having a
"balanced" or "progressive" risk appetite—a moderate approach to risk. Yet a
third of advisors described their clients as being "secure" or "cautious" in
their risk appetite, while only 9 percent of investors described themselves
"Few surveys take such an in-depth look at the same questions from the
perspective of both investors and advisors," said Linda Duessel, senior equity
strategist at Federated Investors. "We wanted to find where advisors and their
clients are united and where they differ. The study provides compelling new
evidence that the much-anticipated 'Great Rotation' has begun to take place,
though it has been slow to materialize."
With the financial meltdown still weighing on their psyches, investors cited
low investment returns in their personal portfolios as a concern, but they
were optimistic about the prospects for the U.S. economy with 56 percent of
investors and 68 percent of advisors expecting the U.S. economy to improve
over the next 12 months.
"Investors are concerned about low returns and appear to be ready to make a
change as long as it's not too risky," said Duessel. "They are shifting from a
state of extreme caution to a willingness to make calculated changes—moving
away from low-yield fixed-income products to equities, balanced and even
higher-yielding bonds. This rotation or move may satisfy investors' need for
a more reliable source of income and is also a smart approach to consider for
pursuing a secure retirement."
While investors are pessimistic about short-term portfolio prospects, they are
surprisingly sanguine about longer-term retirement risks, according to the
survey. Only a small percentage of investors say they are seriously concerned
about their ability to meet retirement goals. However, advisors believe their
clients to be much more worried.
Less than 10 percent of investors interviewed said they were very concerned
about meeting retirement goals or outliving their assets, while nearly a third
of advisors said they thought their clients were very concerned about those
"Our study indicates advisors focus on long-term issues, such as longevity
risk, while investors consider shorter-term trends such as low returns," said
Duessel. "Advisors play a central role in bridging this gap and educating
investors about a very real risk they are underestimating. A reliable source
of income is an important part of the retirement income solution and our
survey indicates investors are open to equity and balanced income products to
help ensure a secure retirement. In fact, 65 percent of investors say a
positive effect on retirement is the most important aspect of income
Additional information available at:
About the survey
The 2013 Investor Mindset Survey was fielded online nationally between June 20
and July 5, 2013. Interviews were conducted with 1,013 high-net-worth
investors, who were U.S. adults, age 18 and older, with at least $500,000 in
investable assets, excluding primary residence and employer-based retirement
funds. The 301 financial advisors interviewed were primarily Certified
Financial Planners, Chartered Financial Analysts, Registered Investment
Advisors and Personal Financial Planners.
KRC Research, an independent third-party research firm, designed and conducted
the survey on behalf of Federated Investors.
Federated Investors, Inc. (NYSE: FII) is one of the largest investment
managers in the United States, managing $363.8 billion in assets as of June
30, 2013. With 135 funds and a variety of separately managed account options,
Federated provides comprehensive investment management to approximately 5,700
institutions and intermediaries including corporations, government entities,
insurance companies, foundations and endowments, banks and broker/dealers.
For more information, visit FederatedInvestors.com.
SOURCE Federated Investors, Inc.
Contact: MEDIA: Ed Costello, 412-288-7538; Meghan McAndrew, 412-288-8103;
ANALYSTS: Ray Hanley, 412-288-1920
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