Investor outlook for the local share market continues to be optimistic, despite Australia entering another year of “pandemic-fuelled” uncertainty, research from Investment Trends has found.

The researcher’s ‘2021 Investor Product Needs Report’, found the average investor capital gains expectations for the All Ords’ varied between 0 and 8 per cent over the past 12 months, settling at around 4.3 per cent in July to October 2021 as the market tested all-time highs. Average yield expectations had risen to 4 per cent over the period, up from 3 per cent.

Investors were less concerned about share market volatility, but increasingly worried about the economic slowdown (47 per cent, up from 21 per cent a year ago), property prices (28 per cent, up from 15 per cent), inflation (25 per cent, up from 11 per cent), and interest rates (24 per cent, up from 4 per cent).

Irene Guiamatsia, Investment Trends’ head of research, said Australian investors remained strongly bullish on domestic equities despite the “dizzying” highs reached in 2021.

“More than a third see domestic equities as the number one asset type for generating yield in the current low-rate environment, followed by international equities and property,” she said.

The past year has also seen the typical portfolio lighter on cash related investments, direct shares and managed funds, while increasing exposure to property and exchanged traded funds, as well as an increase to exposure in environmental, social and governance themes.

“The growth in ETFs and cryptocurrency has been manifested by both higher adoption levels (more investors are using) and higher portfolio allocation (users are placing more money in these assets),” Guiamatsia said.

“There is also a strong ESG thematic overlaying these changing trends in investor behaviour – close to one in two investors report considering ESG principles as part of their decision making during the reporting period.

“Looking ahead, investors plan to stick to what they perceive to be the winning formula in their quest for capital growth – direct shares, ETFs and increasingly, cryptocurrencies.”