Schroders survey reveals income versus risk dilemma

The results reveal that 36% believe that equities will be the most important asset class for clients over the next six months followed by multi-asset (29%) and bonds (26%). This is despite nearly half (46%) believing that bonds are the best asset class for providing income, a popular strategy for ensuring sustainable returns, against the uncertain outlook. Supporting this desire for income, 38% use convertibles at times of uncertainty due to their income potential and lower sensitivity to market volatility.

Regardless of the Eurozone debt crisis and the consequent default risk faced by a number of countries, the survey reveals a positive outlook for the region with 61% believing that the number of countries in the Eurozone will be the same at the end of the year.

Peter Beckett, Head of International Marketing, Schroders, commented:

“Despite slow political and economic progress across Europe, this survey has highlighted a difference in opinion, which could indicate changing sentiment towards markets and risk appetite. Investors are demanding income bond products that offer stable and consistent returns and yet they believe that equities, which are more volatile but with higher return potential, will be the most important asset class later this year. Equally, the use of convertibles could indicate that investors, while still concerned by market volatility, are more confident about the Eurozone outlook and global growth prospects this year.”