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Home bias still strong: Franklin Templeton Investments
Investors will continue to keep their money close to home, but will slowly integrate global investment opportunities as the decade winds on, according to Franklin Templeton Investment's latest global poll.
Franklin Templeton Investments' director of advisory services Jim Mackay said home country bias in Australia was understandable, given the benefit of tax concessions through franking credits.
Australian investors had a stronger home bias than other survey respondents, with 80 per cent saying they would invest at home if they had only one choice, compared with 56 per cent overall.
Global uncertainty is still weighing on investors minds. Fifty-one per cent believe the global economy has deteriorated and 45 per cent said they had become "somewhat to more" risk averse in the past three years.
Of Australian investors, 57 per cent said the global economy has deteriorated, however respondents were optimistic about future returns, believing most asset classes would deliver stronger returns over the next ten years.
A third of Australian respondents said they were optimistic or extremely optimistic about the economy over the next three years, although 40 per cent said the local economy had deteriorated.
Some were more optimistic about current conditions than others, with 34 per cent saying they expected returns of 5 to 15 per cent in the current environment.
McKay said as interest rates and returns on traditional investments decline, optimistic investors may begin to make changes in their investment allocations.
While 72 per cent of respondents have less than 20 per cent of their portfolios invested overseas, 44 per cent believe they will increase the overseas holdings in their portfolios to more than 20 per cent over the decade.
In Australia, younger respondents were more willing to make a higher allocation to offshore investments in the future.
All respondents said they were more optimistic about the return prospects in emerging market opportunities compared with developed markets.
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