Income Is a Challenge for Investors Worldwide
Four in 10 investors worldwide are generating less income than they hope for, according to Legg Mason. The firm surveyed more than 3,000 affluent investors in North America, Europe, Asia and Australia about their current attitudes toward income investments.
Nearly seven out of 10 respondents described investing for income as being extremely important. Yet, across the globe investors said gaps exist between the rates of return they desire and the rates of return they are actually receiving. The largest gap between desire and reality was evident in Taiwan (4.0% gap), with the U.S. ranking sixth (2.6% gap). Low yields and uncertainty over tax law changes were listed as the biggest challenges for U.S. investors. Notably, concerns about inflation were the highest in China, Taiwan and Australia.
In terms of what they invest in, the U.S. led all countries in terms of holding equities (a 39% allocation). U.S. investors also had the largest percentage of their equity allocations held in mutual funds (49% allocation). In terms of fixed income, U.S. investors ranked third worldwide with a 19% allocation, behind Italy and Canada. U.S. investors relied on bond mutual funds more than investors in other countries, however, with a 45% allocation of fixed income to them. U.S. investors were also more likely to invest domestically than any other country, with just 11% investing internationally for income.
Less traditional income-producing investments, such as master limited partnerships, real estate investment trusts and currency trading, were much less popular. Just 10% of U.S. investors said they held these assets. Their popularity trailed that of real estate, which 16% of U.S. respondents said they own to generate portfolio income.
Source: Legg Mason Global Income Survey, Global Summary Report, March 2013.