Respondents also say that they will exercise greater caution in the selection of financial products and service providers. Whereas earlier (during the boom) they would have gone with those who provided the highest returns, now investors say they will also take into account factors such as the transparency and quality of information provided, and how stable is the financial entity. Simple products, accompanied by literature that in simple language explains the risks and the fees charged, are likely to find more takers.

Chastened by their recent experiences, investors also say they will exercise greater due diligence before investing in a financial product, and will also spend more time analysing their portfolios.

A few negative fallouts are also evident. The preference for a high degree of cash holdings could affect future returns. The withdrawal by investors into domestic equities would reduce the level of diversification and could affect the returns they could have earned (from an internationally diversified portfolio).

Increasingly, what is dawning upon investors and investment advisers is that while valuations in the developed world might be attractive today, these nations offer limited scope for growth. Emerging markets are where investors will have to turn to for growth. This augurs well for a market like India.

What should you do

The Barclays Wealth survey is an international survey and it reflects the concerns of investors in the developed world, where the devastation has been much greater. Here in India the situation is not as dire. After performing poorly in 2008 and early 2009, the Sensex is up around 70 per cent from its February lows. As Satya Bansal, chief executive, Barclays Wealth, says: “Respondents from India have been more conservative than their counterparts abroad (see box) . Indian markets are being looked at very positively by foreign investors. Given that interest rates abroad are very low, foreign investors need destinations that offer good growth opportunities. So a lot of foreign investments should come into the Indian markets in future. Indian investors should not worry about FII outflows from the markets and should try to capitalise upon the opportunities available to them.”

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