Investors seek overseas investments

As Chinese investors see a big gap between expected annual investment returns and actual returns in 2012, more investors are considering seeking opportunities aboard.

Chinese investors seek a mean annual return on average of 10.5 percent, but the actual mean return was only 7.1 percent, according to a survey conducted by asset management company Legg Mason Inc and Citibank (China) Co Ltd at the end of 2012. The survey polled 3,028 affluent investors across 13 markets, including 232 Chinese investors with at least $200,000 of investable assets.

"Chinese investors set the return target by taking the possible inflation rate into consideration, but the returns of many investment assets are sliding significantly, so there is a gap between expectation and reality," said Freeman Tsang, Legg Mason's director of business development.

Worldwide, investors in Taiwan saw the biggest gap in expected and actual performance, with a 4 percent difference. Chinese mainland ranked second. Italian investors reported the smallest gap, 1.3 percent.

The survey also found that Chinese investors are showing greater interests in global investment, both for fixed-income products and equities. More than 80 percent of investors surveyed have some portion of their assets invested internationally, and a vast majority said that international opportunities have taken on a greater focus over the past five years. In addition, 71 percent of investors among those who do not have international investments said they plan to invest globally in the future.

Chinese investors currently investing or considering investing for income internationally are most likely to consider the United States, followed by non-BRIC emerging markets. Europe and the United Kingdom, India and Japan garner the least interest.

For investors seeking to invest overseas, the most commonly cited barriers are global uncertainty and lack of transparency.

According to Mason, 88 percent of Chinese investors think it is important or extremely important to invest in income-generating products, and more than 82 percent said they are putting more emphasis on income generation than they did five years ago.

For many Chinese investors, the biggest challenge they face is accepting the need for risk to obtain a good yield. This ranked ahead of concerns about inflation and uncertainty in the global political and economic situation, lack of transparency, complexity, and lack of liquidity. However, Mason said Chinese investors are by a wide margin the most aggressive risk-takers. About 77 percent of those investors said they are willing to take on more risk to generate more income.