Investors in Malaysia have been forced to re-evaluate their investment strategies in response to the new economic reality and ongoing inflation and geopolitical uncertainty, Schroders Global Investor Study 2023 has found.
Schroders’ flagship study, which surveyed over 23,000 people who invest from 33 locations globally, including Indonesia, Malaysia, Singapore and Thailand in Southeast Asia (SEA), has identified that almost 78% of Malaysian investors (versus 78% globally and 79% in SEA) now believe that they have entered a new era of policy and market behaviour as a result of higher inflation and interest rates.
This is in stark contrast to last year’s study when some respondents believed the market challenges to be a blip and predicted a quick return to the more benign, low inflation, low rates environment. As a result, 57% of Malaysian investors (versus 54% globally and 59% in SEA) have already adjusted their investment strategies, and a third intend to do so.
The research shows Malaysian investors who rated their investment knowledge as ‘expert’ were the quickest to react, with 89% (versus 77% globally and 85% in SEA) having already adapted their strategy, while 47% (versus 37% globally and 41% in SEA) who rated their investment knowledge as ‘beginner’- have yet to do so.
The study also highlights that 50% of Malaysian investors are increasingly seeing actively managed investment and mutual funds more attractive, followed by private assets (46%) and cryptocurrencies (44%). The vast majority of Malaysian investors, however, remain optimistic, with 92% (versus 87% globally and 90% in SEA) expecting returns to be either identical to or higher than last year.
This was particularly the case amongst ‘expert’ investors in Malaysia, with only 2% (versus 4 globally and 3% in SEA) expecting next year’s returns to be lower. Strikingly, the majority of Malaysian investors expected annual returns of 12.40%, higher than the global average of 11.5%. This is also higher than the 9.46% annualised return of the MSCI World
Index of global stocks between 1987 and September 2023.
In recent years, regulators and asset managers have actively been working on democratising private assets. However, 59% of Malaysian investors (versus 64% globally and 63% in SEA) still have limited knowledge of the asset class, indicating greater education is required to support the continued growth of these investments. Furthermore, 65% of investors in Malaysia also highlighted that costs and expenses associated with private assets are acting as a barrier to investment.
Nevertheless, on average, Malaysian investors admitted they would consider allocating 15.11% of their funds into private assets (versus 16.4% globally and 15.7% in SEA). For ‘expert’ investors, this rose to 22.01% (versus 23.1% globally and 21.9% in SEA). Specifically, Malaysian investors are most attracted to investing in private equity (33%), followed by real estate (26%) and infrastructure and renewable energy (21%). Again, for ‘expert’ investors, this rose slightly to 40%, saying they most want to invest in private equity.
Overall, Malaysian respondents view private assets as a way to boost portfolio performance (66%)and an important diversification tool (49%). Interestingly, 49% of investors in Malaysia are also attracted by the perceived sustainability credentials of private assets.
