Investing is a personal choice and a number of influences will hold sway over where you put your money. Your personal value system is one such influence and, for most people, this appears to be non-negotiable.
More than three-quarters (77%) of investors refuse to compromise on their personal beliefs when investing, even if higher returns were on offer, new research suggests.
These findings are part of the Schroders Global Investor Study 2020, which canvassed the views of more than 23,000 investors from 32 locations around the world between 30 April and 15 June.
Name your price: investors require a return of 21% to compromise on their personal values
For the 23% of investors that would be willing to compromise, the returns would have to be significant – at least 21% – to convince them to do so.
This is almost double the average annual return that investors expect over the next five years.
Older and wiser? Younger investors are more likely to compromise for higher returns
It also seems that the older the investor, the less likely they are to be willing to forgo their personal values.
While 75% and 76% respectively of 18 – 37 year olds and generation Xers (38 – 50 year olds) would not invest against their personal beliefs, 82% of those over 51 years old wouldn’t pick higher returns if these came at the expense of their personal beliefs.
Source: Schroders
Location matters: personal beliefs vs returns by geography
The results also vary significantly by country.
The data suggest the Chinese are the most committed to investing in line with their personal beliefs, with 90% of respondents reporting they’d not sacrifice their values when investing.
At the other end of the spectrum are investors in the US and Singapore, a full third of which would invest against their beliefs if it meant higher returns.
Source: Schroders
More investors realising returns don’t have to be sacrificed
Previous studies have revealed that investors are still concerned that they have to sacrifice returns for sustainability.
It’s encouraging to note that this year’s study shows that 42% of investors are attracted to sustainable investments because they believe they’re more likely to offer higher returns.
Source: Schroders
Hannah Simons, Head of Sustainability Strategy, is encouraged by the results overall. She says: “The results of this year’s survey are clear – returns are not the only influence of investment decisions. People want their values reflected in the way they invest. People are increasingly looking to contribute to a more sustainable society through their investments.
“Sustainability does not have to come at the expense of performance and it is promising to see this manifesting more strongly each year in the data.
“Communication is key if investors are to understand what sustainable investing really means and what this looks like in their portfolios, and this is a core focus for us.”
Schroders commissioned Raconteur to conduct an independent online study of 23,450 people in 32 locations around the world between 30 April and 15 June 2020. This research defines “people” as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last 10 years.
Important information
This communication is marketing material. The views and opinions contained herein are those of the named author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy.
The data has been sourced by Schroders and should be independently verified before further publication or use. No responsibility can be accepted for error of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.
Past Performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.
Any sectors, securities, regions or countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.
The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. Forecasts and assumptions may be affected by external economic or other factors.
Issued by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority.