Sunday 4 December 2016

Investors confused over performance of assets

Published 28/05/2015 | 02:30

The public is misjudging stock performance, report finds
The public is misjudging stock performance, report finds

Investors are confused about which assets are performing well and which ones are losing them money, a survey shows.

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Most investors thought property was the worst performing asset over the last five years when it was one of the strongest risers, a survey of 1,000 adults by iReach shows.

Around a third of investors thought gold was the second-best performer over the past half decade. But it turned out that renewable energy and property have done better than the almost flat-line performance of gold over the period.

The research, which was commissioned by Irish renewable energy fund Solar 21, shows that investors have declared preferences for one class or another of asset.

Renewable energy funds were thought to be the best-performing asset class, and this was correct based on the performance over the last five years, said Solar 21's chief executive Michael Bradley.

However, he said there was confusion among consumers about which other asset classes were good performers.

"There appears to be definite confusion between assets that are safe and those that may deliver strong growth.

"Gold gets good press in terms of a being safe asset class resulting in consumers believing that it's performed well over the past five years. In reality, its value is only on par with where it was five years ago."

Mr Bradley said that given people's experience with property over the last 10 years in Ireland, it's not surprising that property isn't at the forefront of people's minds when it comes to estimating return on investments

"But its performance over the last five years has actually been very strong," he said.

The survey respondents also showed people have a poor view of shares.

The respondents said shares have been and will continue to be the least favoured investment class.

This means it is the asset class that many pension savers and other non-professional investors will shy away from.

However, Mr Bradley commented: "It seems that people are misjudging the strong recent performance of stock market, though with many stock markets hitting new highs, consumers' lack of interest in this segment may be well founded when looking to the future."

He added that the one area that people have read correctly is the performance of renewable energy funds.

"It's interesting to see the strong support for renewable energy funds. The last five years have definitely seen an increase in popularity for these funds amongst investors," he said.

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