Retail investors look at 1-yr return: Morgan Stanley survey
Even though equities are a long-duration asset, households in India tend to evaluate them on one-year performance, says a Morgan Stanley report, based on the findings of a survey.
September 17, 2013 / 15:55 IST
Moneycontrol Bureau
Retail investors are aware that equities offer a better return compared to bank deposits, and yet prefer bank deposits over equities. These are others are the findings of an online survey of 837 retail investors across Tier I cities in India during May-June 2013 by the retail arm of brokerage house Morgan Stanley. The aim of the survey was to understand what drives their financial investment decisions, how they compare equities to other financial assets, and what would make them increase savings in equities.Following are the key conclusions of the Survey, as quoted from the Morgan Stanley report:* Indian households expect at least a 5 percent risk premium from equities and, on average, the premium demanded is 9 percent.* Even though equities are a long-duration asset, households in India tend to evaluate them on one-year performance.* Investors say higher returns is an important consideration for them to invest in equities in the immediate future. While they rate equities high on this factor, the preference is still for bank deposits interms of actual allocation.* Investors do not plan to change their allocation to equities, indicating that, in effect, considerations of safety and assured returns are driving their decisions. This explains why they expect a huge equity risk premium to forego surety/safety.Also Read: EMs see best weekly inflows in over 30 weeks
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