The global wealth management sector is gearing up for sustainable and ESG investing to become mainstream concepts over the next few years.
But according to a recent study, there is still a long way to go as retail investors fail to change their investment strategy towards a more sustainable approach.
Lombard Odier spoke to 620 high net worth individuals (HNWIs) domiciled in Singapore, Hong Kong, Japan, Thailand, the Philippines, Indonesia, Taiwan and Australia, and found 60% have not actively increased the proportion of sustainability factors in their portfolio.
Some 51% of those who have not acted yet intend to do so (44% last year).
However, 40% said they have already actively increased the proportion of sustainability elements in their portfolio since the pandemic, which is up from 34% last year.
Also, the perception of sustainability is changing from just a “worthy cause” to a legitimate financial opportunity. Some 59% said they believe sustainability will generate superior returns, compared to 54% last year.
The study also uncovered differences in views between genders. Female respondents are more convinced than male respondents (68% vs 54%) that taking sustainability into account can lead to superior returns.
Investments and the global economy
The survey also found that investors in almost all markets are concerned that inflation will rise; 61% of respondents believe that going forward there will be a higher inflation environment, while fewer respondents believe that low interest rates are here to stay in the long term (56% in 2021 compared to 78% in 2020).
A significant proportion of HNWIs (44%) feel that equity markets are too high and due for a correction, and only 31% on average feel that markets will keep rising.
Singapore and Taiwanese investors are the most concerned about an equity correction (both 52%), while only 20% of Indonesia investors are concerned about this possibility.
Almost two-out-of-10 HNWIs said they feel lost and would appreciate more guidance in navigating through difficult times.
Some 55% of respondents between 18 and 24 years old intend to change their portfolio’s liquidity, compared to 48% for those between 35 and 50 years old, 42% for those between 51 and 70 years old, and 23% for those above 70 years old.
Although 60% of respondents across the eight markets said the crisis has led them rethinking some family-related matters, half of them have not acted yet.
Around 40% of Singaporeans said that they are thinking about relocating, while 34% in Thailand and 32% from the Philippines are also thinking the same.
Vincent Magnenat, limited partner and chief executive for Asia at Lombard Odier, said: “As we move forward and embrace this new normal where ambiguities still abound, HNWIs have shown, through our study, that they are very much relying on their bank’s expertise to guide them through the turbulent environment.
“Diversification is of critical importance amidst today’s climate of volatility, and investors are looking for quality advice and access locally to global offerings.”