Investors Seek High Risk High Returns During The Coronavirus Pandemic
The coronavirus pandemic has had a huge effect on global financial markets. But how is it affecting investors portfolios?
At the start of 2020, there were already murmurs about the possibility of another recession on the horizon. Subsequently, the crippling effects of the pandemic have escalated the recession predictions for many countries across the globe.
In the past six months, investors have witnessed unprecedented events during the pandemic, with markets dropping from all-time highs to all-time lows and experiencing record-breaking single-day gains. While investors are still trying to comprehend the effects Covid-19 will have on the global economy, we wanted to delve into any changes they are making to their portfolios in the meantime.
Covid-19’s impact on investors attitude to risk
Between the 30 April and 15 June 2020, Schroders conducted a survey of over 23,000 investors across 32 worldwide locations. This pioneering study found that:
“Faced by of one of the biggest economic shocks in history, it is little surprise that the vast majority of investors reacted by changing their portfolios. What is surprising, however, is that more than a third of investors (35%) took the opportunity to raise their exposure to higher-risk investments.” – Schroders’ Global Investor Study
According to Rupert Rucker, Head of Income at Schroeder’s, investors are diversifying to riskier investments because they are conscious of valuations becoming high again. He thinks that many investors saw February-March as an opportunity to purchase stocks at an opportunistic price.
The survey indicates that many investors appear to be looking for higher returns and are prepared to accept more risk to attain them.