Last updated: 05:39 / Friday, 6 January 2017
The Cerulli Report Asian WM

China's Wealthy Investors Remain Hungry for High Returns

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China's Wealthy Investors Remain Hungry for High Returns
  • Almost 30% of the survey respondents are eyeing an annual return of more than 10%
  • Earning high returns over a short period of time is always the ideal scenario for investors. As such, products that have good liquidity in the Chinese market, such as mutual funds, are typically churned regularly as investors seek to make a quick buck
  • Liquid mutual fund products can show an annual turnover of more than seven times, even fixed-income funds show an annual turnover of two to three times

According to a survey conducted for the recently released The Cerulli Report Asian Wealth Management 2016, about 50% of the survey respondents said they expect an annual return equivalent to the one-year savings deposit rate plus 5%, which translates to a return of about 6.5% to 6.9%.

However, the survey also found that the more investment experience respondents have, the higher their return expectations. Almost 30% of the survey respondents are eyeing an annual return of more than 10%.

Earning high returns over a short period of time is always the ideal scenario for investors. As such, products that have good liquidity in the Chinese market, such as mutual funds, are typically churned regularly as investors seek to make a quick buck. Liquid mutual fund products can show an annual turnover of more than seven times, even fixed-income funds show an annual turnover of two to three times.

The pursuit of higher returns naturally leads to a preference for higher-risk products. More than 70% of the survey respondents said they want to invest in stock and equity products, including real estate investment trusts (REITs), in the next six months. Further, more than 50% of them said that they have been introduced to stocks and equity products.

Cerulli notes that this interest could be related to expectations of an eventual recovery in China's equity markets after the collapse of A-shares in June last year. But, for now, cash and deposits are still the preferred products due to a shortage of quality assets.

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