Investors worldwide find themselves at the crossroads today. Since their March lows, stock markets are up anywhere between 30 and 70 per cent across the globe. Several signs, popularly referred to as the green shoots of recovery, are signalling that the worst of the crisis might be behind us. Internationally, given the low interest rates (and hence the low returns investors are likely to get from bank deposits and debt instruments), and the low valuations at which equities of many companies are available, it would make sense if investors were to increase their exposure to riskier investment instruments now. But so badly have investors been scalded by the downturn that they refuse to court additional risk. Besides, preying on their minds is the fear that the crisis may not have bottomed out after all. What if the leading world economies witness a double-dip recession, or worse, a Japanese-style multi-year slump?

Highly risk averse

A survey commissioned by Barclays Wealth, which covered more than 2,100 mass-affluent and high net worth individuals in more than 10 countries, reflects investors’ dilemma. Almost 88 per cent of those surveyed agree that the current markets offer significant investment opportunities, but as many as 68 per cent of them feel that the risk of further losses remains high. Only 28 per cent say that they plan to increase the level of risk in their portfolio over the next 12 months. Thus, while investors perceive opportunities in the markets, they are too petrified to take advantage of them.

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