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Keeping Tabs on Market Perception and Knowledge about Investments

Credit & Financial Institutions

Keeping Tabs on Market Perception and Knowledge about Investments

by Bank of Valletta

23rd November 2023

7th Wave of the BOV Asset Management Investment Sentiment Index launched

Results of the seventh edition of the BOV Asset Management (BOV AM) Investment Sentiment Index was presented by BOV Asset Management at a business breakfast meeting on Friday morning.

The research, conducted by Marketing Advisory Services (MAS), looked at a representative sample of the Maltese population to better understand the level of investment confidence of the local investor, along with the general perception of different investment instruments and retirement tools.

Addressing BOV representatives from across the Bank’s network of branches and investment centres, Mark Agius, Head of BOV Asset Management explained the goal behind this initiative which is now in its seventh year. “The findings from the BOV Asset Management Investor Sentiment Index contributed towards the Bank’s decision to hold financial literacy sessions across its retail network. In fact, during 2023, such sessions were held in eight localities, with more planned for 2024.” Furthermore, Mr Agius mentioned how investment decisions need to be aligned to the customer’s lifecycle changes, and the financial advisor has an important role to play in understanding the customer’s circumstances and offering different financial solutions. He also mentioned the role that sustainability is playing even in investment choices, which is what spurned the Bank from partnering with Fidelity International.

Thanking MAS for their sterling work, Mr Agius added that “we are committed to conducting this research on an annual basis, thereby enabling all key players to keep abreast of investor sentiment and take action as necessary.”

Daniel Abela, Director of MAS then proceeded to give an overview of the highlights of the research which was conducted in September 2023. He explained that findings indicate that during the past 12 months, the local investor has shown signs of becoming more cautious. This is potentially the result of variables like geopolitical tensions and the decrease in interest rates of bonds, which impacts investors’ appetite. A closer look at the current investment strategies employed by the local investor shows that 42.6% of them still rely primarily on bank deposits as the financial instrument for investments, whilst a further 40.9% claimed that they do not presently intend to invest or are unsure of their plans in this regard for the coming three years. The latter’s motivation was split between being unable to afford it and skepticism in investments being the right vehicle for generating value, opting for other alternatives. Property featured highly among these alternatives, buttressed by a general perception that it is a safe option.

The Market’s Perception of Retirement and Personal Pension Plans

The study focused specifically on investors’ perceptions of retirement and their aptitude for retirement management instruments, including personal pension plans.

It transpires that 51.0% of the sample feel confident that they would be able to maintain their current lifestyle after retiring, with females showing greater concern than their male counterparts. Most of the respondents when given multiple options to choose from (88.7%) are only looking to maintain a comfortable lifestyle and be able to take care of basic expenses like rent, utility bills and health care. This motivation outweighs by far other goals like travelling which only account for 32.1% of the respondents.

It is also interesting to note that 28.3% of the respondents plan to work past the retirement age, primarily because they wish to continue working. This motivation is closely followed by a concern that they would need to supplement the government pension to cover the daily expenses. On the other hand, there is relatively higher confidence that the National Healthcare system will continue to provide benefits, commensurate to the ones they are enjoying today.

When asked about retirement savings, 44.1% of respondents confirmed that they are actively saving for their retirement. Among those under the age of 30, only 29.1% have begun saving for their future. This is primarily attributed to the fact that most respondents cannot afford it, with the need to pay off loans being the most popular response.

BOV Asset Management Investment Sentiment Index

The sentiment towards the current investment market has decreased when compared to scores achieved in previous years, with 57.5% expressing negative feelings towards the local investment market. However, the market expects investments to do better in the next 12 months, primarily in relation to real estate, government stocks and bonds.

The current index reading, which started at 100 in 2017, is at 86.75, whilst the future index reading is 86.88, indicating that generally people are more cautious than in the past, both vis-à-vis the present situation and the foreseeable future.

Speaking at the end of the presentation, Mark Agius thanked the Bank’s Customer Experience Unit and MAS for their support in refining this research tool, whose insight feeds into practical action and financial solutions for the market in the investments sector. “Investment has become an integral part of the financial services offered by BOV Group. The BOV Asset Management Investor Sentiment Index is today an important tool for all financial services stakeholders to better understand the market while helping us design investment solutions that address better market demand.”

Credit & Financial Institutions

Keeping Tabs on Market Perception and Knowledge about Investments

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