US Investors Have Low Interest In International Equities

by Philip Morton, Investors Offshore

23 July 2007

According to a survey published by asset management firm Schroders this week, American individual investors view China as the world's dominant economic superpower in the next decade, when compared with the United States, India, Germany and Russia.

However, the Schroders survey found that only 13% of Americans currently invest in international stocks, and only 19% plan to invest in international equities over the next five years.

Commenting on the results of the poll, conducted in June 2007, Virginie Maisonneuve, Head of International Equities at Schroder Investment Management observed that:

"China's economic growth and rising purchasing power illustrates the long- term opportunities for investors looking for higher returns from companies based in or benefiting from the world's fast-growing and emerging economies. This is one of the main reasons to buy international stocks."

She continued:

"It is important for individuals to diversify their investment portfolio to minimize risk and capitalize on medium- and long-term growth opportunities that reflect global economic growth. By ignoring emerging countries like China, investors risk missing out on future growth opportunities."

The study provided evidence which suggested that the likelihood of investing in international stocks increases with income level, as only 10% of those with an income under $25,000 stated that they planned to invest in international stocks, while 38% with incomes over $75,000 revealed that they planned to do so.

Other key survey findings also went towards suggesting that individual investors expect to adopt a conservative investment approach over the next five years:

• 49% of American investors plan to invest in CDs, savings accounts, or money market funds in the next 5 years.
• 35% of survey respondents said they will invest in mutual funds.
• However, when comparing demographic groups, men are 50% more likely to invest in international equities than women, indicating a higher risk tolerance among male investors.
  

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