Investor confidence jumps to 12 year high in ASB survey; property most popular

The ASB Investor Confidence survey has found confidence rose in the fourth quarter of 2009 to a net 30% expecting better returns in the year ahead, the highest level recorded in the 12 year-old survey. Property remained the popular investment, just ahead of bank savings accounts and term deposits. Here is the full statement below from ASB.

Investor confidence has climbed to the highest recorded level since the ASB Investor Confidence survey began 12 years ago, according to figures released today. The Q4 2009 survey shows a net 16 point increase in investors expecting a better rate of return over the next year, climbing to a record net 30 percent. ASB Head of Investment Services, Jonathan Beale, said the strongly positive result must be tempered by the fact that the economy is just coming out of a hugely tumultuous period. "Over the past 12 months we've shifted from the depths of recession and a record low in investor sentiment to the highest ever recorded optimism since this survey began. When you've dropped to such a low point, the only way left is up." Investors' attitudes shifting Mr Beale says the tide is turning for investors, with some now looking towards different investments for greater returns. "The most optimistic respondents were those whose main investments lay in shares, followed by managed investments," he said. "This shows a small but nonetheless significant shift. The fractional lift in the popularity of these assets may be a sign that investors are a little more prepared to dip their toes back into investments perceived to bring greater returns, albeit with greater potential volatility." Property retains top position The most favoured investment classes remain those in favour since the financial crisis started. Rental property increased in popularity over the quarter, up 2 points with 18 percent of respondents rating it as offering the best return - making it the most popular investment for three quarters running. Bank savings accounts remained steady on 15 percent, while term deposits ranked third with 12 percent. "House prices rose over much of 2009, although rental rates remained fairly static," Mr Beale said. "Interestingly, the steady lift in the popularity of rental property as an investment occurred even amidst public speculation that the Government may introduce legislation that could impact the relative attractiveness of rental property returns." KiwiSaver favoured by younger investors A breakdown of respondents shows that almost half (48 percent) of those aged between 18 and 29 were confident that KiwiSaver alone would support them into retirement, however the vast majority of older age groups did not believe it would be sufficient. "Young investors have time on their hands to build a significant pool of savings prior to their eventual retirement," Mr Beale said. "In contrast, the savings of those close to retirement will have been built up through avenues other than KiwiSaver, which is a very recent addition to the range of retirement savings options." "Overall, while there are encouraging signs in the economy, there will still be a lot of change over the coming months and the recovery is more likely to be gradual than sudden. With this in mind, investors should seek professional advice to help them with their investment decisions," he said.