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German investors trade return for safety

Return and risk balance concept, words and drawing on blackboard

This contrasts with their peers in the UK, Netherlands and the Nordics. In each of these countries, less than a third of investors believe ‘safety’ of their investments overrides everything else in importance.

Instead, they believe the expected rate of return is what counts. That’s especially the case in the Nordics (Sweden, Denmark and Finland), where 62% of investors prioritise the expected return when selecting investments. The expected return is also by far the most important aspect for investors in the UK and the Netherlands. In Germany, only one in five investors share this opinion.

What is most important for you when selecting an investment?

As a predominantly German-speaking country, the attitudes of investors in Switzerland come closest to those of their German peers. Swiss investors also tend to prioritise safety over expected return, but less extremely so than the Germans.

Short-term bias

In a sign that German investors generally tend to worry more about the short-term than about the long term, they are much more likely to consider ‘legal risks’ when entering into an investment than (more long-term) reputational and environmental risk. Only 27% of German investors care about environmental risk, compared to 48% in the Netherlands and 50% in the Nordics.

Alexander Schindler, director for institutional business at Union Investment, urges investors to be more considerate about environmental risks when making investment decisions.

“The ongoing debate about climate change is increasingly playing a role in investment activity,” he explains. “Polluters can also damage their own business model. On this basis, they constitute a significant investment risk of which every investor should be mindful.”

Part of the Bonhill Group.