With a growing number of investors forced to move up the risk ladder due to the low-yield environment, avoiding losses has become a key priority, the latest Union Investment risk management survey revealed.
According to the poll, conducted among 212 instiutional investors in eight European countries, 75% cited avoiding losses as their priority, with 82% of German respondents citing it as a key concern.
German investors were followed by those in Switzerland (75%) and the Nordics (69), while risk management appeared to be relatively less of a priority for Dutch (62%) and British (61%) investors.
While German investors are still the most cautious in Europe, their risk aversion has declined by 7% compared to the previous year.
“Many institutional investors in Germany are evidently rethinking their investing strategy and adapting it to bring it more into line with investment reality. The dilemma of the hunt for returns is causing many investors to climb further up the risk ladder. To avoid disappointment, this new situation needs to be accompanied by professionalisation of risk management,” explains Alexander Schindler, member of Union Investment’s board of managing directors responsible for business with institutional clients.
Besides the key importance of risk aversion, respondents also expressed concerns for the future, estimating that 60% of investors will fail to meet their investment objectives.
Almost two thirds of respondents warned of herding behaviour and a growing risk of stock market bubbles, with German investors again being the most bearish, 74% of respondents foresaw a growing risk of markets crashing.