Investors take lower yields as income interest rises

Investors are more cautious in their asset allocation following the global financial crisis, a report commissioned by Principal Global Investors shows.

Rather than chasing the best possible yield, investors are aiming for specific goals that are sensitive to the amount of risk taken, the report says.

Retail investor interest in income funds has increased significantly from just under half two years ago to 62 per cent this year.

Principal Global Investors chief executive Nick Lyster says investors have become more risk aware and agile than ever before.

“The financial crisis taught investors a number of lessons, but a key takeaway for all was greater caution,” he explains.

“In 2014, as caution has become more embedded in the investor psyche, investors have recalibrated their return expectations.”

The report was developed by Create-Research and canvassed 704 asset managers, pension funds, distributors and similar firms.