Global portfolio seen mitigating risk

Despite the explosion of high profile global risks, the appetite for global markets remains strong. In fact, a survey by Franklin Templeton found that demand for global investments will only increase over the coming decade, as investors seek to minimize their exposure to any single economy.

At the time of the survey, only 34% of the 13,000 respondents said they were invested outside of their domestic market. Half said they planned on diversifying beyond their own country in 2011.

This comes as no surprise, given that 67% expect their local stock market will perform the same or worse than the rest of the world in 2011.

Taking a longer view, interest in foreign exposure climbed to 62% when respondents were asked about investment intentions over the next 10 years.

“The global economy is improving and investors are looking worldwide for opportunities,” said Greg Johnson, president and CEO of Franklin Resources Inc., the parent of Franklin Templeton Investments Corp. “A diversified portfolio today is no longer just a mix of asset classes but also a mix of geographies.”

Among the most optimistic about their domestic markets were Indians, with 61% expecting domestic market outperformance, Brazilian investors (52%) and Chileans (46%).

Canadian respondents were right behind these three optimistic markets, with 43% expecting Canadian stocks to outperform global markets in 2011.

“Despite their optimism about the markets, many Canadians are poorly prepared for the financial future,” said Don Reed, president and CEO of Franklin Templeton Investments. “Our survey found 57% do not have a financial plan for retirement and 45% are worried they will not have enough to retire. A financial advisor is critical when it comes to meeting your long-term goals.”

To illustrate that point, the survey found 54% of Canadians believed the domestic equity market was either flat or down in 2010, when in reality, the TSX gained 14%. That stands in stark contrast to the knowledge level of those optimistic Indian investors; 67% knew their local equity markets posted a gain in 2010, when the Bombay Stock Exchange’s primary index rose 18%.

To read the full report, click here.

The Franklin Templeton Global Investor Sentiment Survey included responses from 13,076 individuals in 12 countries: Canada, as well as Brazil, Chile, Germany, Hong Kong, India, Italy, Mexico, Singapore, South Korea, the U.K. and the U.S.

Surveys were completed from January 6 to 17 in all countries except the U.S. where the survey was completed from January 6 to 7. Data were weighted to make the results representative in each country.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.