Investors May Have a False Sense Of Security: Natixis

Two-thirds of U.S. investors say they are prepared for a market downturn, such as the steep declines seen in recent weeks, according to a new investor survey released by Natixis Investment Managers.

Natixis’ survey of 750 individual investors in the U.S. found that 7 in 10 (71%) feel financially secure — for now.

According to David Giunta, CEO for the US and Canada at Natixis Investment Managers, a decade of rising markets, low interest rates and subdued volatility may have given investors unreasonable expectations and a false sense of security.

“Our research suggests many investors’ instincts could undermine their financial success as volatility returns to the markets, but their continued trust in their financial advisors should help them remain disciplined as markets become more turbulent,” Giunta said in a statement.

At least half of the investors surveyed said the long bull market bolstered their confidence that they are on track to reach long-term financial goals.

However, a closer look at investor sentiment and behavior reveals that investors may have an unrealistic understanding of risk and return, particularly among those whose only investing experience has been in the 10 years since the financial crisis.

Many investors today (78%) — which includes 86% of those who started investing after the financial crisis — are confident their portfolio is properly diversified. The survey also finds, however, that half admit they can’t identify most of the underlying investments in funds they own.

According to Natixis, “this leaves them potentially unaware of overweighted exposure to certain sectors and geographies that have grown disproportionately faster than others and may need rebalancing.”

The survey also finds that a significant portion of those surveyed are focused on short-term gains.