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November 30, 2016 | 11:15 | Dubai
New research has uncovered large differences between the understanding, attitudes and engagement of investors with different nationalities. The report, carried out by financial solutions provider, Old Mutual International, and investment management firm, Quilter Cheviot, identified UK expats as the most risk averse while Non-Resident Indians (NRIs) were the most informed on their investment portfolios.
The research found that 48% of UK expats in the UAE believe they are ‘risk averse’, compared to an overall average of 32%. North American (NA) expats were in line with the average at 32% while 21% of European expats (excluding UK) identified themselves as risk averse, and NRIs charted as the least at 17%.
The largest percentage identifying themselves as risk takers were NRIs (33%), followed by European (21%), UK expats (20%), and just 16% of NAs.
The research also found that NRIs are more involved in their investments compared to other nationalities. 92% review their investment portfolio either monthly or quarterly with their adviser, compared to 79% of European respondents, 58% of NAs and 53% from the UK.
And this level of engagement was also demonstrated by NRI’s knowledge of their investments. 75% said they know most or all of what they are invested in, compared to 74% of Europeans, 65% of UK expats and just 63% of NAs.
Another surprising difference came from the attitudes of investors based in the UAE’s largest two cities. More investors from Dubai (32%) identified themselves as risk takers, compared to 22% from Abu Dhabi, while 39% from the capital claim to be risk averse compared to 26% from Dubai.
Brendan Dolan, regional director, Middle East and Africa, for Old Mutual International said: “It is perhaps no surprise that investors have different behaviours and expectations depending on their nationality, as cultural and geographic variances play a key part in shaping who we are. We know from our own experience in the region that different nationalities have different behaviours, and this research echoes those variances.
“UK expats, for example, are typically more cautious, they tend to invest for the long term, and will place a high value on the services provided to them from their broker. NRIs on the other hand seem more comfortable with taking investment risk, and may seek out shorter term opportunities, constantly reviewing the strategy within their portfolio.
“These differences highlight the extent to which financial advisers and providers need to tailor their approach to meet a range of expectations.”
The research also highlighted some differences when it came to what investors consider is the most important benefit of a Discretionary Fund Manager (DFM) – an investment expert who manages the investment portfolio on the customer’s behalf.
The findings show most expats believe that matching investment portfolios to their individual level of risk is the most important benefit of a DFM. However, while expats from the UK believe the tight controls DFMs have to protect against losses was the most important benefit, NRIs believe it is the ability to provide a truly tailored investment portfolio.
Mark Leale, Head of Quilter Cheviot’s Dubai Representative Office in the DIFC, said: “Attitudes of investors based in the UAE are changing and they now have an increased level of understanding of investment risk and more specific requirements than ever.
“Investors are increasingly attracted towards the services of a DFM, but these services can vary greatly between providers. Investors need to carefully select the DFM they feel will match their needs and expectations and take account of underlying cultural variations.”