Retail investors in Singapore remain optimistic about the next six months, and are seeking greater flexibility for their portfolios, a study commissioned by JP Morgan Asset Management (JPMAM) has found.
The JP Morgan Investor Confidence Index fell one point - from its two-year high last June - to 121 out of 200.
Anything above 100 denotes optimism.
One caveat: The semi-annual survey was conducted last November and December, before the US Federal Reserve's decision to taper its bond-buying programme.
Investors with an annual income above $60,000 and with at least five years of active investment experience were asked six questions, ranging from those on the economic environment to their expectations for their investment portfolio.
The questions were weighted equally to calculate the index.
Investor willingness to increase their investments was one reason for the high confidence. Just over half the 501 respondents (51 per cent) said they were willing to increase the overall size of their investments in the coming six months, up from 46 per cent in June.
More investors also expressed confidence that the local and global economic environment would get better, citing strong regional growth and the recovery of global markets such as US and Europe as factors.
However, investors tamped down on their upbeat outlook when asked about the appreciation of their investment portfolios and a rise in the Straits Times Index (STI).
This time round, only 55 per cent thought the STI was extremely or somewhat likely to increase against 62 per cent six months ago. At the same time, 48 per cent, down from 52 per cent, expected their investment portfolio to appreciate in the coming half year.
In terms of asset allocation, Singapore remained popular among investors here, with 57 per cent saying they will consider investing here, the same as before.
Mutual-fund investors here have shifted away from balanced funds, the study also showed. Just 20 per cent of their mutual-fund portfolio was allocated to balanced funds, down from 29 per cent previously. Some have moved to multi-asset funds, with more intending to invest in these over the next six months.
Brian Tan, who heads Fund Sales for Singapore in JPMAM, said this could be due to investors looking for something more dynamic and diversified, with access to different asset classes.
Besides multi-asset funds, there was also a growing preference for equities among mutual-fund investors, with those surveyed increasing their weighted allocation from 17 to 21 per cent of their mutual-fund portfolio.
Mr Tan said: "With valuations for equities still undemanding relative to historical levels and to bonds, we believe that 2014 could be a good year for investors who are prepared to take more risk for potentially better returns."
The study noted as well an increased interest in developed markets. Around 18 per cent of respondents, up from 12 per cent, said they intend to invest in the USA; 11 per cent indicated interest in Europe, up from the 6 per cent in June.
Tai Hui, the chief market strategist for Asia in JPMAM, said: "It's not that surprising, given how (companies in) developed markets have actually done very well in earnings."
Companies in the US, Japan and, more recently, Europe have genuinely delivered growth, he said, even as emerging markets have been harder hit by weaker global growth and a struggle to contain costs.
The study indicated a dip in enthusiasm for Asian markets, with 29 per cent of investors indicating interest there, down from 36 per cent in June.