Understanding and attitudes investors depend on nationality, research shows

New research has uncovered large differences between the understanding, attitudes and engagement of investors with different nationalities.

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The report, conducted by financial solutions provider Old Mutual International and investment management firm Quilter Cheviot, showed UK expats as the most risk averse.  Non-Resident Indians (NRIs) were the most informed on their investment portfolios.

The research found that 48 percent of UK expats in the UAE believe they are ‘risk averse’, compared to an overall average of 32 percent. North American (NA) expats were in line with the average at 32 percent while 21 percent of European expats (excluding UK) identified themselves as risk averse and NRIs charted as the least at 17 percent.

The largest percentage identifying themselves as risk takers were NRIs (33 percent), followed by European (21 percent), UK expats (20 percent) and just 16 percent of NAs.

The research also found that NRIs are more involved in their investments compared to other nationalities. Ninety-two percent review their investment portfolio either monthly or quarterly with their adviser, compared to 79 percent of European respondents, 58 percent of NAs and 53 percent from the UK.

Level of engagement

This level of engagement was also demonstrated by NRIs’ knowledge of their investments. Seventy-five percent said they know most or all of what they are invested in, compared to 74 percent of Europeans, 65 percent of UK expats and just 63 percent of NAs.

Another surprising difference came from the attitudes of investors based in the UAE’s largest two cities. More investors from Dubai (32 percent) identified themselves as risk takers, compared to 22 percent from Abu Dhabi, while 39 percent from the capital claim to be risk averse compared to 26 percent from Dubai.

Different behaviors and expectations

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Brendan Dolan, regional director, Middle East and Africa, Old Mutual International, said: “It is perhaps no surprise that investors have different behaviors and expectations depending on their nationality, as cultural and geographic variances play a key part in shaping who we are. We know from our own experience in the region that different nationalities have different behaviors and this research echoes those variances.

He added: “UK expats are typically more cautious. They tend to invest for the long term and will place a high value on the services provided to them from their broker. NRIs on the other hand seem more comfortable with taking investment risk and may seek out shorter term opportunities, constantly reviewing the strategy within their portfolio.”

These differences highlight the extent to which financial advisers and providers need to tailor their approach to meet a range of expectations, he said.

The research also highlighted some differences when it came to what investors consider is the most important benefit of a discretionary fund manager (DFM) – an investment expert who manages the investment portfolio on the customer’s behalf.

Investment portfolios

Investment banking

The findings show most expats believe that matching investment portfolios to their individual level of risk is the most important benefit of a DFM.

However, while expats from the UK believe the tight controls DFMs have to protect against losses was the most important benefit, NRIs believe it is the ability to provide a truly tailored investment portfolio.

Mark Leale, head of Quilter Cheviot’s Dubai representative office in the DIFC, said: “Attitudes of investors based in the UAE are changing and they now have an increased level of understanding of investment risk and more specific requirements than ever. Investors are increasingly attracted towards the services of a DFM, but these services can vary greatly between providers.”

Investors need to carefully select the DFM they feel will match their needs and expectations and take account of underlying cultural variations, he said.

 

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