SANTIAGO, CHILE -- (Marketwired) -- 04/29/13 -- Chilean investors, like investors in most countries, have a prominent home country investment bias, currently allocating 61% of their investments to Chile, but they expect that percentage to decline to just over 50% over the next decade as more investments are allocated to emerging markets, which currently account for 17% of their allocation but is expected to rise to 22% in 10 years.
These and other findings were revealed by the 2013 Franklin Templeton Global Investor Sentiment Survey which polled 9,518 investors in 19 countries across Asia Pacific, the Americas and Europe on their current attitudes towards investing and their expectations for 2013 and the decade ahead.
Chilean investors think the best equity returns by geography over the next year will come from Asia (28% of respondents), followed by Chile (27%), and that the best fixed income returns will come from Chile (28%), followed by Asia (20%). Over the next 10 years, their expectations show a similar pattern, with both equity and fixed income return expectations for Asia ranking highest, followed by Chile.
Optimism and Return Expectations
More than three-quarters (77%) of Chilean investors described themselves as optimistic or very optimistic about the stock market, the second highest percentage of any of the 19 countries surveyed. Two thirds (67%) of Chilean investors think they will be able to meet their long-term investment goals without stocks and indeed they have one of the lowest levels of stock ownership (29%) of all 19 markets surveyed. Chilean investors expect an average annual rate of return of 11% in 2013, and even better (16%) over the next 10 years, the survey showed. In addition, more Chilean investors say they will be adopting a more conservative investment strategy (51%) this year than will be adopting a more aggressive one (46%).
"What the survey results tell us is that Chilean investors expect double-digit investment returns with little or no risk, given their low levels of stock ownership, a clear disconnect," said Sergio Guerrien, Franklin Templeton's country head for South America ex-Brazil. "Portfolio diversification, including stock ownership, has historically proven essential to long-term investment returns, so some investor education is needed."
While Chilean investors show a growing interest in investing beyond their borders, they cite several concerns with doing so, including lack of knowledge about markets outside Chile (41% of respondents), impact of exchange rates on their investments (36%), and perceived greater risk in markets outside Chile (34%). Factors making them reluctant to invest this year include the state of the global economy (49%), the Eurozone debt crisis (41%) and low interest rates (38%).
Despite these barriers to global investing, Chilean investors do show a growing interest in their neighboring country, Brazil. Chilean investors are much more likely to think Brazilian equities and fixed income are good investments opportunities over the next 10 years (41% of respondents for equities, and 37% for fixed income), than bad ones (10% for equities and 13% for fixed income), although a large percentage are not sure (48% and 50%). Approximately 40% of Chilean investors say they are likely to invest in Brazilian equity or fixed income in 2013 or over the next 10 years.
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