Large gap in expectations: Survey shows the portfolio return expectations of professionals and private investors

A study compiled the return expectations of portfolios from both private investors and professional advisors. The result: The gap in expectations is sometimes very large. Are private investors too optimistic?

• Portfolio return expectations survey
• Private investors confident about the performance of their portfolios
• Advisors are somewhat more conservative in their expectations

Some big gaps in expectations

Natixis, the investment bank for French savings banks and cooperative banks, conducted a survey of 8,550 private investors and 2,700 professional financial advisors and based on this visualized long-term portfolio return expectations, sorted by country. While the investor survey was conducted in 23 countries between March and April 2023, the financial expert survey was conducted in 16 countries between March and April 2022. The gaps in expectations shown show the difference in the return expectations of private investors and professional advisors.

USA with the largest difference in expectations

2022 was the worst year for stock markets in over a decade, recalls the Advisor Channel of the business medium Visual Capitalist. Investors worldwide remained confident about the long-term performance of their portfolios. Although consultants are also optimistic, their expectations are somewhat more conservative than those of private investors.

In the USA, private investors have the highest long-term annual return expectations at 15.6 percent. At the same time, the largest gap in expectations was identified there, as consultants only expect a return of seven percent.

Very high long-term return expectations from private investors were also measured in Australia, Hong Kong, Canada and Japan.

Investors in Europe with moderate return expectations

Private investors in Europe and Great Britain, on the other hand, have the most moderate return expectations, according to the survey. Geopolitical tensions, high interest rates and gloomy economic data have dampened their confidence, says Visual Capitalist.

While private investors in Germany expect a long-term return of 10.1 percent, that of professional advisors was recently at seven percent. Meanwhile, the smallest gap in expectations was found in Singapore: private investors consider a long-term return of 14.5 percent to be realistic, while consultants’ expectations are 14.2 percent. Overall, the UK shows the largest decline in expectations of all the countries surveyed, followed by Spain. On a global average, the long-term portfolio return expectation of private investors is 12.8 percent, and that of professional advisors is nine percent.

Expectations remain high, but the gap is narrowing

“80% of respondents say the last year was a wake-up call that reminded them that stocks can fall,” according to Natixis. Factors such as inflation, interest rates and countries’ ability to weather economic headwinds are likely to have a significant impact on future portfolio returns, Visual Capitalist concludes.

In general, expectations are still high, but the gap between investors’ wishes and what advisors consider realistic has narrowed from 61 percent in 2021 to 42 percent, reports Natixis.

Editorial team finanzen.net

ttn-28