IN FOCUS6-8 min read

Are investors more motivated by morals or money?

Schroders’ Global Investor Study 2020 suggests a vast majority of investors are not willing to compromise on their personal beliefs when putting their money to work, even if returns were higher.

23/09/2020
Balancing-act-tightrope

Authors

Jo Marshall
Investment Writer
Hannah Simons video

Investing is a personal choice and a number of influences will hold sway over where you put your money. Your personal value system is one such influence and, for most people, this appears to be non-negotiable.

More than three-quarters (77%) of investors refuse to compromise on their personal beliefs when investing, even if higher returns were on offer, new research suggests.

These findings are part of the Schroders Global Investor Study 2020, which canvassed the views of more than 23,000 investors from 32 locations around the world between 30 April and 15 June.

Name your price: investors require a return of 21% to compromise on their personal values

For the 23% of investors that would be willing to compromise, the returns would have to be significant – at least 21% – to convince them to do so.

This is almost double the average annual return that investors expect over the next five years.  

Older and wiser? Younger investors are more likely to compromise for higher returns

It also seems that the older the investor, the less likely they are to be willing to forgo their personal values.

While 75% and 76% respectively of 18 – 37 year olds and generation Xers (38 – 50 year olds) would not invest against their personal beliefs, 82% of those over 51 years old wouldn’t pick higher returns if these came at the expense of their personal beliefs.

Investing-against-beliefs-age

Source: Schroders

Location matters: personal beliefs vs returns by geography

The results also vary significantly by country.

The data suggest the Chinese are the most committed to investing in line with their personal beliefs, with 90% of respondents reporting they’d not sacrifice their values when investing.

At the other end of the spectrum are investors in the US and Singapore, a full third of which would invest against their beliefs if it meant higher returns.

Investing-against-beliefs-country

Source: Schroders

More investors realising returns don’t have to be sacrificed

Previous studies have revealed that investors are still concerned that they have to sacrifice returns for sustainability.

It’s encouraging to note that this year’s study shows that 42% of investors are attracted to sustainable investments because they believe they’re more likely to offer higher returns.

Are-sustainable-investments-attractive

 Source: Schroders

Hannah Simons, Head of Sustainability Strategy, is encouraged by the results overall. She says: “The results of this year’s survey are clear – returns are not the only influence of investment decisions. People want their values reflected in the way they invest. People are increasingly looking to contribute to a more sustainable society through their investments.

“Sustainability does not have to come at the expense of performance and it is promising to see this manifesting more strongly each year in the data.

“Communication is key if investors are to understand what sustainable investing really means and what this looks like in their portfolios, and this is a core focus for us.”

Schroders commissioned Raconteur to conduct an independent online study of 23,450 people in 32 locations around the world between 30 April and 15 June 2020. This research defines “people” as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last 10 years.

Issued in the Channel Islands by Cazenove Capital which is part of the Schroders Group and is a trading name of Schroders (C.I.) Limited, licensed and regulated by the Guernsey Financial Services Commission for banking and investment business; and regulated by the Jersey Financial Services Commission. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

 

Authors

Jo Marshall
Investment Writer

Topics

Cazenove Capital is a trading name of Schroders (C.I.) Ltd which is licensed under the Banking Supervision (Bailiwick of Guernsey) Law 2020 and the Protection of Investors (Bailiwick of Guernsey) Law 2020, as amended in the conduct of banking and investment business. Registered address at Regency Court, Glategny Esplanade, St. Peter Port, Guernsey GY1 3UF, (No.24546) . Schroders (C.I.) Limited, Jersey Branch is regulated by the Jersey Financial Services Commission in the conduct of investment business. Registered address at IFC1, Esplanade, St Helier, Jersey, JE2 3BX, (No.31076).

The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.