Investors globally are focused on allocating to funds that meet their personal needs and principles, Schroders Global Investor Study 2022 has found.

Schroders’ flagship study surveyed over 23,000 people who invest from 33 locations globally. The results show that investors who class themselves as being ‘expert’ are more focused on the role that their principles and values can play in their investment decisions.

Our research shows that more than half of these ‘expert’ investors stated that their personal principles are
‘very important’ to them – significantly higher than those who class themselves as having an intermediate
level of investment knowledge (16%) and those in the ‘rudimentary’ category (10%).

Furthermore, the importance given to values and principles by investors increases with age, with more than three-quarters (76%) of people aged 71+ more likely to prioritise these aspects, perhaps indicating that older investors are more confident and set in their views.

In addition, the results show that people feel overwhelmingly that as shareholders they should have the power to influence the companies they are invested in. This applies across the investment knowledge spectrum; from those who class themselves as having a ‘beginner’ level of investment knowledge, through to the ‘experts’.

A formidable 95% of ‘expert/advanced’ investors believe they should be empowered to do so, as well as 69% of ‘beginners’.

Climate issues are seen as the most important engagement priorities in all but three countries – Mexico, South Korea, and Belgium – all of whom instead ranked issues of natural capital and biodiversity as the most crucial, demonstrating the significance of environment-related issues.

Knowledge is power

However, despite the positive intentions, a gap remains in terms of investors who feel genuinely empowered to make the right investment decisions for their future. Some 82% of ‘expert/advanced’ investors feel they have sufficient knowledge to feel confident in making investment decisions for their financial future, while only a quarter (26%) of ‘beginner/rudimentary’ investors’ feel knowledgeable enough to do so.

This highlights the need for better financial education and the role financial providers have to play. Over half (51%) believe that investment companies should be responsible for ensuring that people have sufficient levels of knowledge on personal financial matters, and 39% think it should be the responsibility of financial advisers.​

Significantly though, 44% believe that educational institutions have a role to play in educating people about financial matters, while a quarter (24%) view this as their personal responsibility.

Greater knowledge also driving private asset focus among retail investors

Furthermore, the Study indicates that people now feel more confident in accessing investments that might previously have been seen as off-limits. A particular example of this comes in private assets, with 47% of investors feeling empowered to access both private equity and digital assets.

However, while most people feel empowered to invest in private assets, some asset classes are still perceived as complex, requiring additional support from financial providers and advisers in order to access them. This is particularly the case for infrastructure where investors were more likely to invest through a third-party product such as a mutual fund (41%) rather than directly (37%).

In short, the greater the level of perceived investment knowledge, the more likely people are to be interested in investing in private asset classes. For example, one third of ‘beginners’ feel infrastructure is beyond their grasp compared with 11% of ‘expert’ investors. This suggests the trend towards the democratization of private assets is likely to be linked to greater levels of financial literacy.

Stuart Podmore, Schroders’ Investment Propositions Director, commented: “This Study demonstrates that perhaps now more than ever before, investors of all levels of experience are increasingly wanting to express their views if companies are unable to justify their actions.

If the pandemic has taught us nothing else, it is that companies, as well as governments, are under closer scrutiny than ever to mitigate environmental, societal and governance risks in a sustainable way. What’s so interesting about our survey this year is that societal and governance risks are starting to rise up the list of priorities for investors.

“Increased investment knowledge appears to support people confidence in supporting corporate decision- making. As an active asset manager and guardian of our clients’ assets, we are committed to engaging in year-round dialogue on their behalf, to support better investment outcomes.

Sheila Nicoll, Schroders’ Head of Public Policy, commented: “This year’s results reinforce the increased need to support people in informing themselves about investment, and engaging in their finances. This needs to be from earliest schooldays, throughout the education system, and during the course of changing circumstances in life. At Schroders, it is our priority to support our clients in finding the best investment solutions which meet their needs while ensuring they have all the right tools to make their decisions.”

Georg Wunderlin, Global Head of Private Assets, Schroders Capital, commented: “Schroders Capital, our private assets business, is well placed to support the ‘democratization’ of private assets. We’re seeing increasing interest from individual investors to build a holistic portfolio comprising private and public investments, as evidenced by our Global Investor Study. Our teams are able to offer private investors access to this world through a range of specialist private asset vehicles and blended solutions which encompass both private and public assets.