Interest in global markets is on the rise, with 62% of investors planning to invest outside their home countries over the next decade, according to a new survey.
More than half of the respondents to the Franklin Templeton Global Investment Sentiment Survey-a poll of more than 13,000 people in 12 countries-said they plan to invest outside of their home country in 2011, with 62% planning to do so within the next ten years. Currently, just 34% of respondents have investments outside of their own country, with only 33% believing their own country's market will perform better compared to the rest of the world in 2011.
"A diversified portfolio today is no longer just a mix of asset classes, but also a mix of geographies," said Greg Johnson, president and CEO of Franklin Templeton Investments. "As people, businesses and economies around the world become increasingly connected, we can expect to see a rise in trade and consumption and the expansion of stock markets over the next decade and beyond. Savvy investors are watching these trends and making investment decisions based on the growth potential they see globally."
Of the about 1,050 U.S. respondents, 62% believe that the U.S. stock market will advance in 2011, but only 27% think it will outperform stock markets around the world. The survey showed a gap between the beliefs and actions of U.S. investors, with 73% believing that the best investment opportunities will not be exclusive to U.S. markets in the next ten years but only 40% actually having investments outside of the U.S.. Only 47% of U.S. respondents say they intend to invest in the global market in the next year, with that number slightly increasing over the next decade to 53%.
The study also showed the U.S. investors perceptions do not necessarily reflect reality, with 49% believing the U.S. stock market was either down or flat in 2010. The S&P 500 Index actually gained 15.06% last year. Only 21% of Americans believe the U.S. stock market outperformed global markets, which is only partially true. While the MSCI Emerging Markets index was up 19.20% in 2010 versus the S&P 500's 15.06% gain, the S&P 500 exceeded the 9.43% gain recorded for the MSCI World Index.
"About three in five U.S. respondents (59%) don't think they will be able to meet their long-term investment goals without investing in stocks," said David McSpadden, senior vice president of Global Advisory Services for Franklin Templeton Investments. "We believe that if investors focus on the longer-term opportunity provided by equities, the case is very compelling, and looking globally for those investments is a key to building a diversified portfolio."
The survey also showed that opinions on emerging markets differed by region. While 86% of Asian countries and 61% of Latin American countries believed the best opportunities in the next ten years lie in emerging markets, only 53% of Europeans and 37% of North Americans agree.
The Franklin Templeton Global Investor Survey included responses from countries including Brazil, Chile and Mexico in Latin America; Hong Kong, India, South Korea and Singapore in Asia; Germany, Italy and the U.K. in Europe, and the U.S. and Canada in North America.