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Despite the positive news on the regrowth of the Irish Economy, consumer sentiment remains at low levels and this is reflected in consumers’ increasing adversity to investment risk. A recent survey carried out by Behaviour & Attitudes on behalf of Friends First revealed an increase of 5%, from 67% to 72%, of people indicating that they were either conservative or very conservative when making a financial decision. This shows the growing conservatism being displayed by investors. This is despite the fact that 4 out of 5 (79%) surveyed felt they could now meet all or almost all of their monthly financial commitments.
Simon Hoffman, Pensions & Investments Director, Friends First, commented: “Despite a period of economic growth, it is clear that consumers remain cautious when it comes to risk. Many people have been well served by deposit-based investments in recent years. In the midst of the financial crisis banks were paying high interest rates to secure capital, but now bank deposit accounts are paying negligible, if any, interest. Following the economic downturn, conservatism amongst investors remains high but these low interest rates have seen investors take on some risk to seek stronger returns.”
The Friends First research findings also showed a varied attitude to risk across gender and age groups, with men aged 25-34 more likely to take investment risk. Women aged 35+ demonstrated a more conservative approach when it came to investing. In terms of long-term investment, two in five (40%) men were positively disposed to risk in order to increase potential future returns, whereas more than half of women (51%) disagreed, indicating their preference for a more conservative approach to long-term investment.
When it came to comfortability with the concept of risk and return when considering long-term investment, nearly one third (31%) of those aged 25-34 were willing to seek risk in order to maximise returns. This willingness to take risk decreased to one in five (24%) among those aged 35-44 with the majority (52%) in this age group confirming a more conservative outlook when it came to the question of risk. For those aged 45-54, 18% were comfortable with the concept of risk and return whereas 57% were more conservative.
Both these funds are an ESMA risk rating of 3 and are part of the Friends First Portfolio range of multi-manager, multi-asset funds which are managed to maintain their particular risk profile for investors.
“There are many options out there for those who are concerned about risk. For example our low risk Portfolio funds offer an excellent opportunity to investors to benefit from a ready-made portfolio, designed with their attitude to risk in mind. The Portfolios use a multi-asset, multi-strategy and multi-manager approach which as a diversified strategy aims to ensure that an element of each portfolio is capable of contributing to performance at all points in a market cycle. ” Mr Hoffman concluded.
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