What SA investors expect their annual return to be over the next 5 years

Asset manager firm Schroders has published its Global Investor Study for 2017, asking over 22,000 wealth investors across 30 countries, what their expected returns are over the coming five years.

Despite the political and financial instability currently facing South Africa, local investors said that they expect to make an average annual total return of 13.3% – significantly higher than the global average return expectation of 10.2%.

Doug Abbott, head of business development at Schroders South Africa, said that this positivity was slightly concerning given that the FTSE/JSE All Share Index delivered only 2.6% in 2016.

“The study found that the average annual return expectation of South African wealth investors (13.3%) was higher than the expectations of investors in many other countries, such as 8.7% in Europe, 11.7% in Asia and 11.7% in the Americas,” said Abbot.

“A concern around this is that these high return expectations may leave some South African wealth investors disappointed or result in them failing to meet their financial goals, such as saving for retirement.”

Interestingly, Abbott points out, the South African wealth investors did show quite a high degree of caution regarding how their investments could be impacted by the current geo-political landscape.

“When asked how the current uncertainty surrounding international politics and world events affected their investments, almost two-thirds (64%) of South African wealth investors said they don’t want to take on as much risk now and almost half (46%) said they are holding more money in cash now than before.

“However, almost as many (63%) felt that world events represented investment opportunities and half (49%) don’t let politics and world events detract from their investment objectives,” he said.

While many South African wealth investors may well be overly optimistic with their return expectations, encouragingly, there is a strong desire to learn more about investing, said Abbott.

“The study showed that an overwhelming majority (91%) of South African investors want to improve their investment understanding, which would lead to more realistic expectations in terms of future investment returns.”

The research defined ‘investors’ as those who will be investing at least R150,000 in the next 12 months and who have made changes to their investments within the last 10 years. 

Read: How much you could have made if you invested R10,000 in these 20 top South African companies

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What SA investors expect their annual return to be over the next 5 years