DUBAI: The holding period of investors in the UAE is much lower than the global average and it has partly to do with the market volatility, a study conducted by Schroders revealed.
On an average, UAE investors hold their investments for 1.6 years compared to to the global average of 2.6 years, that’s a year lower than their overseas counterparts. However, this holding period is against the recommended 5 years investment period.
This short-term approach may be fuelled by global investors expecting, on average, a 10.7 per cent total return (income and growth) per year over the next five years, an increase on the 9.9 per cent stated a year ago. Investors in the UAE expect to make 3 per cent more than global investors at 13.8 per cent. In regards to income only, investors in the UAE expect to make 12.4 per cent annually, compares to 10.3 per cent globally.
Globally millennials are less patient with their investments with an average holding period of 1.9 years compared to the 3.7-year average holding period for baby boomers.
“The ebbs and flows of markets are always going to keep investors on their toes but the key is to focus on the long term. Chopping and changing investments particularly during challenging markets is likely to be detrimental for investors’ portfolios and ultimately lead to disappointing investment returns,” Charles Prideaux, Schroders’ Global Head of Product and Solutions, said.
The study also revealed that majority of global investors made direct changes to the risk profile of their investments during the volatile three months in 2018.
The study - which surveyed over 25,000 people in 32 countries, including the UAE – found that 70 per cent of investors modified their portfolios in direct response to the instability. These included, 37 per cent who moved into lower-risk investments and 35 per cent who opted for higher-risk options. 30 per cent of people kept their investments the same.
“Instead it is critical to look through the uncertainty: our goal at Schroders is therefore to deliver investment solutions that reflect investors’ needs through time and which also suit their risk appetites,” Prideaux said.
In April 2019, Schroders commissioned Research Plus Ltd to conduct an independent online survey of 25,743 people who invest from 32 countries around the globe. The countries included Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, the UK and the US. This research defines Investors as those who will be investing at least 10,000 euros in the next 12 months and who have made changes to their investments within the last 10 years.