During times of upheaval in financial markets, investor behaviour can become exaggerated as they seek to protect their capital against swings in asset prices or profit from uncertainty.

Based on the findings of a global survey of 2,300 high-net worth individuals*, the report reveals a clear divide in the way investors in both emerging and developed markets are responding to the credit crunch, reinforcing the need for the financial services industry to take more scientific approach to understanding the behavioural and personality traits that drive investors decisions.

Perceptions of risk

During volatile conditions, survey respondents from emerging markets, including the UAE (43 per cent), China (41 per cent) and India (40 per cent) say they are more likely to increase the level of risk in their portfolios - indicating that they regard the current environment as one of opportunity, rather than a hindrance. The survey results also show that in a period of increased economic volatility, respondents from the UAE (48 per cent) are most likely to switch their fund manager, while wealthy investors from the US (23 per cent) are least likely to select a new manager.

In contrast, the survey results suggest that high-net worth investors in developed markets such as Italy (27 per cent), the UK (29 per cent) and Spain (29 per cent) are among the least likely to increase the level of risk in their portfolios and are applying increased caution to their investments during market volatility.

Age also plays a part, as 51 per cent of investors aged under 50 said they plan to increase their allocation to cash compared to 41 per cent of those above 50. The experience of investing in previous economic cycles means that older generations are less nervous in the face of volatility.

The property ladder - a tale of two trends

Property prices reached record levels in many parts of the world in the last 12 months and some investors have looked to take advantage of the strong prices more than others.  More investors in emerging markets (48 per cent), such as Asia and Eastern Europe, plan to increase their asset allocation to property than those from the Organisation for Economic Cooperation and Development (OECD) countries (37 per cent).

Individuals in developed markets are losing confidence in bricks and mortar, particularly as the market has become more unstable during 2008.  Nearly one-sixth (16 per cent) of the respondents and a fifth (17 per cent) of investors in OECD countries plan to decrease their allocation to property, particularly those in Spain (29 per cent) and the UK (22 per cent). 

Impact of gender on investment decisions

While in the past, women have been less confident than men in their financial situations, there is much to suggest this trend is changing. Historical evidence has shown that women's lack of confidence in financial issues stems in large part from their relatively recent participation in the management of money. The gap between the wealth held by male and female high net worth individuals is narrowing, and the numbers of women occupying top positions in business, finance and government swelling. One impact of this is growing confidence in financial issues among women and a new generation of highly financially perceptive female investors.

There are also noticeable gender differences in relation to sources of information used. Women tend to be less influenced by the media than men but are more likely to turn to friends and family. However, male respondents rated the media as their most important source of financial information. 

Soha Nashaat, Managing Director and Head of Barclays Wealth, Middle East, North Africa says: "In the past few years, the wealthy in the region have become more demanding; expecting higher than average levels of investment performance and service. The insights into the behaviour of investors, gained through these studies, demonstrates yet again the importance of the expert advice of private bankers, especially during turbulent times. It is becoming increasingly crucial that wealth advisors fully understand the psychological and emotional factors that influence the investment decision-making process, ranging from an investor's reaction to volatility to the impact of gender on the investment process. By gaining these critical insights, we can build portfolios for our clients that reflect their individual personalities."

Over-monitoring and increased trading

More than half (51 per cent) of investors say that they plan to analyse their portfolio on a more regular basis and a further 51 per cent are more likely to monitor a specific investment on a daily or weekly basis, rather than the performance of their overall portfolio (41 per cent). The research suggests that in times of volatility, investors become preoccupied with the performance of their specific stocks, rather than their overall portfolio. This can cause investors to take decisions that may make sense when considered the basis of a specific asset, but which are less rational in the context of the overall portfolio - this can lead to over-trading and can also contribute to market uncertainty.

In their search for the best result, investors are also more inclined to undertake increased trading, with more than a third (39 per cent) expecting to intensify the amount of times they trade in the stock market.

Kevin Lecocq, chief investment officer at Barclays Wealth says: "A successful investment strategy revolves around time in the market rather than trying to time the market. Booms and busts will come and go with every bull and bear market; however long-term financial goals are achieved through a consistently executed approach over a reasonable horizon."

-Ends-

Notes to editors:
Barclays Wealth Insights: Breaking the Mould - A question of personality is the sixth instalment of an influential series launched in December 2006. This sixth volume examines the behaviour and attitudes of wealthy investors during times of volatility. The Barclays Wealth Insights series is developed in partnership with the Economist Intelligence Unit (EIU).

Methodology
Barclays Wealth has again partnered with the Economist Intelligence Unit (EIU) to produce a report which examines the choices that wealthy investors make - especially during periods of greater volatility - and explores the characteristics that determine why they are making those choices.

It is based on two main strands of research: a global survey of more than 2,300 mass-affluent (with up to £1 million in investable assets), high net worth (with up to £10million in investable assets) and ultra high net worth individuals (with up to and in excess of £30million in investable assets) and a series of in-depth interviews with experts on wealth and investment behaviour.

Respondents were spread across a number of key international markets, with the highest numbers of respondents from the United States, India, United Kingdom, Singapore, Hong Kong, Canada, Switzerland, Spain, the United Arab Emirates and Monaco. The survey took place between March and April 2008.

Log onto www.barclayswealth.com to access the Barclays Wealth Insights series.

About Barclays Wealth
Barclays Wealth, the UK's leading wealth manager by client assets, has £132.5bn client assets globally, at 31 December 2007. It serves affluent, high net worth and intermediary clients worldwide, providing international and private banking, fiduciary services, investment management and brokerage. Thomas L. Kalaris is the Chief Executive of Barclays Wealth and he joined the business at the start of 2006. It was voted Global Investor's Wealth Manager of the Year for 2007.

Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services with an extensive international presence in Europe, the USA, Africa and Asia.

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs over 134,000 people. Barclays moves, lends, invests and protects money for over 27 million customers and clients worldwide.  

* Volume 6 is based on the findings of a global survey among 2,300 high-net worth investors (with up to £1 million in investable assets), high net worth (with up to £10million in investable assets) and ultra high net worth individuals (with up to and in excess of £30million in investable assets) and a series of in-depth interviews with experts on wealth and investment behaviour.

To arrange an interview or for further media information:
Barclays Wealth
Dania Haffarbazzy              
00971 4 365 2979
dania.haffarbazzy@barclayscapital.com

Memac Ogilvy PR
Melanie Schmutz 00971 4 305 0310                                                
melanie.schmutz@ogilvy.com

Houri Elmayan                     
00971 4 305 0330                                                                
houri.elmayan@ogilvy.com

© Press Release 2008 from Memac Ogilvy PR

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