Ideas fly
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A rollercoaster ride in the markets over the past year hasn’t tempered investors’ return expectations, suggests a new survey by Natixis Investment Managers, a global asset management firm.

In the survey, Canadian investors said their long-term annual return expectations were 11.2% above inflation — 15% higher than in a previous Natixis survey conducted in 2019.

Those outsized returns compared to 5.1% that financial professionals said was realistic in a separate Natixis poll last year.

“In a prime example of recency bias, many investors seem to believe that if their investment portfolios did so well during the pandemic, they’ll do even better during the recovery,” said Dave Goodsell, executive director of Natixis Investment Managers’ Center for Investor Insight, in a release.

“However, investors need to be emotionally equipped to withstand the higher levels of risk needed to pursue those outsized returns.”

More than half (56%) of Canadian investors surveyed said they weren’t comfortable taking risks to get ahead, and the vast majority (78%) would choose the safety of asset protection over investment performance.

Volatility ranked second only to a slower-than-expected economic recovery as Canadian investors’ biggest immediate investment concern.

While many Canadian respondents came through the pandemic relatively unscathed — 69% reported no negative health or financial impacts — nearly four in 10 (36%) said they were stressed about their financial security.

Generational differences in financial security emerged, with nearly 10% of both generation X and Y respondents saying they were forced to withdraw from their retirement plans as a result of the pandemic, versus 3% of baby boomers.

Overall, 11% of Canadian investors had made withdrawals from savings and investment accounts, and 6% had decreased retirement plan contributions.

About 15% of Canadian investors increased trading activity because of the pandemic. Both regionally and globally, trading activity was highest among gen Y investors, the survey said.

On a positive note, many Canadian investors reported that the pandemic convinced them of the importance of keeping spending in check (42%), establishing emergency savings (27%) and understanding portfolio risk (19%).

About the survey: For Natixis, CoreData polled 300 investors in Canada with at least $100,000 in household investable assets as part of a larger global survey of 8,550 investors across 24 countries conducted in March and April.