Challenging market conditions are causing 86% of European end investors to take action

Now is the time for asset managers to support financial advisors with their communications with European end investors, research by Fundamental Media finds

Key findings:

• Around half of respondents are saving the same amount as they did a year ago, while around a quarter are saving more
• With 86% of respondents indicating they plan to take action, asset managers have a responsibility to educate and support financial advisors in their communication with end investors
• When asked where they are planning a decrease or increase in investment, 40% of end investors indicated they plan to increase their exposure to ETFs over the next 12 months with respondents from Germany and France the most likely to do so

More than a quarter of European end investors have responded to the current market conditions by changing the type of products they are invested in, research by Fundamental Media has found.

For our European end investor research, we surveyed 4,390 end investors across Germany, the UK, Italy and France. Questions focused on end investors’ views on various investment products, saving for retirement and ESG as well as their investing behaviour, how they pick their investments and their media usage.

Our research found that 30% of European end investors are currently saving less than they did a year prior, while 46% of respondents are saving the same amount and 24% are saving more.

When asked what action they have taken or are considering taking to protect their investments against the current market environment (inflation, energy crisis, etc), 27% of end investors in Germany, the UK, Italy and France said they have or are considering to make changes to the type of investment products they invest in. This was the top response in all countries surveyed, but at 31% Italian end investors were more likely to change their investment products than their counterparts in the other markets.

When it comes to the type of investment products they have already changed or are considering changing, shares were most often mentioned by German, Italian and French investors, while UK and Italian investors are most likely to make changes to their cryptocurrency holdings. German respondents also mentioned ETFs, while UK end investors often mentioned bonds.

At 23%, increasing the overall amount invested was the second-most recorded response to how end investors hope to protect their investments in the current market environment, while reducing the overall amount invested was mentioned by 15% of investors. Making changes in asset allocation was selected by 17% of end investors, with French investors (at 33%) being the most likely to respond in this way.

Only 14% of respondents indicate they plan to take no action at all. At 23% German end investors most often said they will take no action, compared to only 7% of Italian investors. Stop investing altogether was the least popular option among all countries surveyed, although German end investors are the most likely to do so (at 6%).

Our research reveals that 86% of end investors are planning to take action, ranging from changes in allocations, types of investment products and the amount invested. Some investors plan to increase their overall investments, while others plan to reduce the amount invested or even to stop investing. With such a wide range of options being considered by end investors, there clearly is a substantial need for educational content and guidance from asset managers and financial advisors on how these decisions could impact end investors’ investment portfolio and overall investment goals. This is therefore a crucial time for asset managers to support financial advisors with their client communications to end investors.

When asked where they are planning a decrease or increase in investment, 40% of end investors indicated they plan to increase their exposure to ETFs over the next 12 months with respondents from Germany and France the most likely to do so. Real estate is also becoming more popular, especially in France where over half of the respondents are planning an increase.

The scale option “Stay the same” has been excluded from the chart to better highlight trends. The answer options were ranked by the difference between increase and decrease.

Global equities are expected to increase for around a third of respondents in each market, while multi-asset funds are expected to increase mainly in France and the UK. When it comes to emerging market equities, Italian, French and British end investors are expecting an increase, while German respondents are more likely to decrease their investment or leave their exposure unchanged.  

The intended future allocation to bonds differs widely across markets and bond category. Italian respondents are the most likely to increase foreign bonds and decrease domestic bonds. UK respondents are the most likely to increase domestic bonds but leave international bonds unchanged. French respondents are the most likely to make changes to their allocation to bonds in general (either increasing or decreasing), but compared to the other markets, they are the most likely to decrease both types of bonds. German respondents, on the other hand, are not planning major changes to their exposure to bonds.

Looking at the wide variety of measures European end investors are considering for their investments, there is an opportunity for asset managers and financial advisors to use their extensive knowledge and research to educate end investors. Now is the time to step up, not the time to go silent.

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