The up-and-down markets over the past year have strengthened the resolve of Canadian investors who are looking for returns of 10.6 per cent above inflation on their investments this year. That’s on top of average reported gains of 11 per cent in 2020, according to findings of a new survey of individual investors published by Natixis Investment Managers.
In Canada, investors are emerging from COVID-19 with long-term return expectations that are 15 per cent higher than before the pandemic began and twice the 5.1 per cent returns financial professionals say is realistic.
Natixis surveyed 300 investors in Canada who have at least $100,000 in household investable assets as part of a larger global survey conducted in March and April 2021 across 24 countries.
Investors need to be able to take higher risk levels
“Many investors seem to believe that if their investment portfolios did so well during the pandemic, they’ll do even better during the recovery,” said Dave Goodsell, executive director of Natixis Investment Managers’ Centre for Investor Insight. “However, investors need to be emotionally equipped to withstand the higher levels of risk needed to pursue those outsized returns.”
The persistent fear of losses could test investor mettle when markets swing and require financial advisors to help clients keep their emotions in check and their expectations grounded in reality.”
Volatility ranked second only to a slower-than-expected economic recovery as Canadian investors’ biggest immediate investment concern.
Canadians did better than in most other countries
While not the experience of all Canadians, the investors Natixis surveyed fared better during the pandemic than those in most other countries in terms of employment and income, said David Giunta, CEO for the U.S. at Natixis Investment Managers.
Across North America, Generation X and Y investors were two times more likely than Baby Boomers to say the pandemic significantly set them back financially. Nearly 10 per cent of both Generation X and Y investors were forced to withdraw from their retirement plan vs. three per cent of Baby Boomers.