SA investors have unrealistic expectations, global study finds

A global study found that South African investors expect their portfolios to return nearly 13% annually over the next five years – almost 3% higher than the global average and 8.4% higher than their actual returns over the past five years.

South Africa shows the third highest difference between expected returns and actual returns (8.4%), trailing only Russia (13%) and the UAE (8.5%), according to the Schroders Global Investor Study 2018.

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The global asset management firm surveyed over 22 000 wealth investors across 30 countries.

For the purposes of the survey, returns included growth in money as well as any income paid out in the form of dividends and interest from a variety of investments including cash, bonds, property funds and equities.

According to the study, the average South African investor holds 31% in equities, 17% in bonds, 21% in cash, 15% in property funds and 15% in alternative investments.

Claire Walsh, personal finance director at Schroders, says that globally, investors' expectations follow a particularly strong spell for global equities in particular, and echo returns achieved by global stock markets in the past five years.

The historic performance of markets does not offer a guide to future returns, she adds.

Although it says returns are notoriously difficult to predict, Schroders' Multi-Asset investment team forecasts a 5.6% return for global equites - generally the asset class that drives long-term returns in a multi-asset portfolio - over the next 10 years.