Five Years After Financial Crisis, Investors Chasing Regular Income Over High Returns
CREATE-Research singles out salient investment trends between 2009 and 2013
DES MOINES, Iowa--(BUSINESS WIRE)-- Findings from five years of the CREATE survey series (2009-2013), developed by CREATE-Research and commissioned by Principal Global Investors, reveal a surge in popularity for income-focused funds among investors seeking a new form of diversification. The data highlights an emphasis on risk management and regular income over chasing high returns.
Investment Trends Analysis: A Five-Year Evolution shows a shift in investor behavior from a focus on wants to a focus on needs. The analysis is applied to four key investor segments: defined benefit (DB) plans, defined contribution (DC) plans, retail investors and high net worth investors.
"Since the 2008 credit crunch and the resulting debt crisis, investors have needed to work their assets harder, so the emphasis on yield has only continued to increase," said Barb McKenzie, chief operating officer of Principal Global Investors. "What's more, market valuations have become distorted, with price-earnings ratios having no sensible anchor points. As a result, choosing real assets and alternative investment options has become a new way to navigate risky markets."
The analysis shows DB plans working to gain control over spiraling deficits since 2008, and DC plans experiencing a significant surge in popularity with investors seeking advice-embedded products that would incorporate the best features of DB plans. The most notable change in the retail space is the shift from asset accumulation to income generation whilehigh net worth investors are targeting multiple investment objectives over high returns.
The renewed focus on needs is further reflected in investors' growing appetite for real assets such as real estate and infrastructure. It is also evident from the increasing attractiveness of multi-asset class funds, with five-year asset class trends revealing 63 percent of DC plans in 2013 favor these despite not being on the radar in 2009. Forty-nine percent of high net worth investors also cited the rise of multi-asset class funds as an emerging trend.
"The shift in investor focus from wants to needs is marked, as is the accompanying change in the underlying asset mix. This process has created its own leaders and laggards," said Prof. Amin Rajan, CEO of CREATE-Research and author of the survey series. "It has also catapulted new asset classes to the fore, especially ETFs. The longer the debt crisis lasts, the more ingrained will these changes become."
CREATE-Research is an independent think tank specializing in strategic change and the newly emerging business models in global asset management. It undertakes major research assignments from prominent financial institutions and global companies. It also undertakes advisory work for senior decision makers in reputable organizations across Europe and the United States. Its work is disseminated through high-profile reports and events that attract wide attention in the media. Further information can be found at www.create-research.co.uk.
About Principal Global Investors
Principal Global Investors is a diversified asset management organization and a member of the Principal Financial Group®, with expertise in equities, fixed income and real estate investments, as well as specialized overlay and advisory services. Principal Global Investors manages $289.1 billion in assets1 primarily for retirement plans and other institutional clients2.
About the Principal Financial Group
The Principal Financial Group® (The Principal®)3 is a global investment management leader offering retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal Financial Group has $450.6 billion in assets under management4 and serves some 19.8 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
1 As of June 30, 2013.
2 Principal Global Investors is the asset management arm of the Principal Financial Group ® (The Principal ®) and includes the asset management operations of the following subsidiaries of The Principal: Principal Global Investors, LLC; Principal Real Estate Investors, LLC; Principal Enterprise Capital, LLC; Liongate Capital Management LLP; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors; Edge Asset Management, Inc.; Morley Financial Services Inc.; Finisterre Capital, LLP; Origin Asset Management, LLP; Principal Global Investors (Europe) Limited; Principal Global Investors (Singapore) Ltd.; Principal Global Investors (Australia) Ltd.; Principal Global Investors (Japan) Ltd.; Principal Global Investors (Hong Kong) Ltd.; CIMB-Principal Islamic Asset Management Sdn. Bhd.; and the majority owned affiliates of Principal International, Inc. Assets under management includes assets managed by investment professionals of Principal Global Investors under dual employee arrangements with other subsidiaries of The Principal and assets managed in accordance with investment advice provided by Principal Global Investors through the delivery of a model.
3 "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
4 As of June 30, 2013.
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Principal Financial Group
Jaime Naig, 515-247-0798
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