A major investor survey has revealed that many are prepared to pay a premium for active fund management but also want professional advice to help them make the most of their portfolios.

The Natixis Investment Managers Survey - which questioned 9,100 investors globally including 750 in the UK - found that most wanted more diversification, lower volatility and higher returns.

However many investors were also confused about investing. Many did not understand, for example, the risks involved in index funds or the risk needed to increase returns. Many said they would prefer safety over high returns.

The survey, however, did show that many investors were favourable to actively managed funds - as long as the reward was better.

 More than half of UK investors (51%) said they were prepared to pay a premium for active management “in order to combat volatility,” a preference held by 56% of investors globally.

• Some 63% wanted new strategies to diversify their portfolio and 56% said that, because of volatility in the market, they were looking for investments beyond traditional stocks and bonds.
• A substantial majority of UK investors (67%) expected their investment funds to have a portfolio different to that of an index.
• UK investors’ long-term return expectations have jumped to an ambitious 10.8% (above inflation), compared to 11.7% globally, but nine in ten believe it is important to protect their assets in periods of volatility.

Natixis said that while UK investors may have mixed feelings about risk and return they expressed a preference for active management and professional advice.

Even though 90% of those surveyed in the UK (86% globally) believe it is important for their investments to deliver long-term results over short-term gains, 79% (77% globally) would take safety over performance if forced to choose. 

Matthew Shafer, head of global wholesale at Natixis Investment Managers, said: “Investors don’t seem to fully grasp that pursuing double-digit returns will likely mean investing at the higher end of the risk spectrum.”

“The fundamental disconnect between risk tolerances and return expectations highlights the importance for investors to work with their advisers, to understand the reality of risk and volatility and to be fully equipped to achieve their long-term goals.”

The survey also found a renewed focus on alternative investments among UK investors. Over five in ten (56%) said volatility has them looking for investments other than stocks and bonds.

Only 34% of UK investors said they already owned alternative investments, compared with 38% globally. Past surveys have revealed that when it comes to investing in alternatives, investors particularly value support and advice from their financial advisers.

The survey revealed some confusion about index funds in the minds of investors. About two-thirds (65%) in the UK said they understood the difference between active and passive investing, yet only 72% (68% globally) recognised that index funds provided market returns, up or down, and offered no protection from market declines.

Approximately two thirds (65%) of UK investors said that recent market volatility showed that index funds were riskier than they had previously thought.