Clarity: Investors want clarity in the face of market uncertainty

With the uncertainty of today’s macro/market environment clouding their financial prospects, individuals are struggling to find clarity on what to do next. Faced with an unfamiliar market environment, they need help rationalizing their return expectations with their appetite for risk and understanding what higher interest rates mean for their investments. They also need a better understanding of which investment opportunities are right for them now.

How moderate is moderate risk?

Since 2017, the data from our biennial investor survey has found a vast disconnect between investors’ return expectations and the risk they’re willing to take. That truth rings out loud and clear in 2025. Overall, 83% describe themselves as either conservative (36%) or moderate (47%) investors.

In light of the current environment, investors have set modest return expectations of 7.3% above inflation for 2025 – 33% lower than the 10.9% return they reported earning just last year. It appears that most see this as a temporary performance disruption and expect they will be able to generate returns of 10.7% above inflation over the long-term.

Lower expectations narrow the gap with what advisors call realistic

Even with 10.7% returns, long-term expectations are out of line with what financial advisors say is realistic. But the gap is narrowing. In late 2024, advisors say it was realistic for investors to expect long-term returns of 8.3% above inflation.² The difference between investors and advisors leaves an expectations gap of 22%. While it is less than the 54% gap presented by investors’ 12.8% expectations in 2023,³ it is still significant, especially as markets struggle.

Nowhere has the gap closed more than in the US. In 2023, investors had long-term return expectations of 15.6% above inflation.³ Advisors said 7.1%2, leaving a 119% gap. Now even with investors setting a more moderate expectation of 12.6% above inflation, there is still a 76% gulf between what investors want and what advisors think they can achieve.

But even moderate expectations still present significant risk. Pursuing double-digit returns can require significant allocations to equities, leaving investors exposed to higher levels of market volatility. Despite what they may say, most are not comfortable with volatility.

Global expectations gap

Table showing expectation gaps between long-term return expectations for investors vs financial professionals

Dive deeper into our Individual Investor Survey

Executive summary

Challenge 1: Confidence

Challenge 3: Coaching

2025 Natixis Global Survey of Individual Investors

4.89 MB

Investors see volatility as a bigger risk than missing goals

Investors appear to understand that volatility is part of investing, and 62% say it creates an opportunity to grow wealth. But this looks like a case of investors saying what they think rather than revealing what they feel.

Only 53% of investors say they are comfortable taking on risk in order to get ahead. So, how do they define risk? Investors consistently define risk as either exposure to volatility (25%) or losing assets (22%). But short-term distractions may divert them from long-term objectives, as only 11% define risk as not meeting their goals. Financial advisors in our surveys consistently rank failing to meet goals as the number-one risk investors face.⁴

After two consecutive years of double-digit returns, it is surprising only 11% see missing out on returns as a risk and 13% think of it in terms of outperforming the market.

Uncertain markets make active investing more appealing

Market risks may be forcing investors to reconsider passive investments. Over the past 10 years, investors in our surveys have consistently shown they understand the basic premise of index funds: market exposure at a lower fee. But they’ve also assumed benefits that passive can’t deliver, telling us passive is less risky, protects them on the downside, and gives them access to the best opportunities.

Few recognize that index funds expose them to all market risks. With no built-in risk management, index funds can’t protect them from losses either. Simply put, if markets go up, so do returns. But when markets go down, returns do as well. Index funds may provide access to top-performing companies, but they also include the worst performers.

Looking at a more volatile market in 2025, two-thirds of investor say they don’t want to be locked in to only what the market returns. Another 71% globally, and 80% in the US, want the opportunity to outperform the market. Recognizing that the recent tech run-up has given the Magnificent Seven stocks dramatic influence on index performance, almost half (48%) worry that if those companies falter, it would have an outsized negative impact on their portfolios.

That’s not to say that they are willing to trade off half of the passive value proposition, as 53% say they are still concerned about investment fees. But almost the same number (52%) say they wish the mutual funds they like were available as an exchange-traded fund (ETF), adding credence to the rise of actively managed ETFs that combine the alpha potential of active investment selection and portfolio management with the intraday trading and tax efficiency of ETFs.

How investors define investment risk

Investors fail the complicated math behind bonds

With inflation holding on, higher interest rates may linger longer. But at some point, rates will come down. Few investors know what it means for bonds. Overall, 62% claim to understand how rates impact bonds, although those in Australia (42%) and the Germany (50%) were significantly less confident.

To test how much they understand about rates and bonds, we gave our investors a quiz. We asked what happens to bonds when rates are cut. We gave them four possible answers: If rates are cut, will the value of bonds you own now go up or down? And if rates are cut, will the income from bonds you buy in the future be higher or lower? The question allowed respondents to make multiple selections and also offered the option to select, “I don’t know.”

The correct answer has two parts: 1) The value of the bonds owned now will increase because a higher rate will be more attractive to other investors, and 2) the new lower-rate bonds will generate a lower level of income.

When it comes down to it, the math is tricky and includes inverse relationship. Only 3% of the 7,050 investors surveyed got it completely right. Just 226 people in that panel knew that a rate cut would mean the value of bonds they own at the current interest rate would go up (33%), and that bonds bought after the cut would have lower income potential (15%). In the end, about one-quarter of those surveyed took the out and said I don’t know.

Despite the confusion, 48% of those surveyed own bonds, and they are willing to learn more about them. Overall, 65% say they understand the role of bonds in portfolios. As it stands, 41% plan to invest more in bonds over the next year. However, most telling about the relationship investors have with the math behind bonds are the 60% who say it’s just more fun to invest in stocks.

Private markets hold strong allure as stocks and bonds stumble

With public markets off to a shaky start, investors are looking elsewhere for opportunity in 2025. Much like institutional investors, the individuals we surveyed are focusing on the potential for private markets to enhance returns and enhance diversification.

As they learn about how professional investors have been turning to real estate to private equity to private debt and infrastructure, 44% of investors globally say the more they read about private assets, the more they want to invest. Globally, 40% say they’re already invested.

Overall, 65% say they understand some key differences between public and private markets. They recognize that private assets have a higher fee. However, 50% globally believe the returns are worth the additional expense. Performance potential is a key part of the appeal, as 34% say they feel like they’re missing out on the best opportunities, such as SpaceX and OpenAI, by limiting themselves to public markets.

They also realize that private investments present some unique hurdles, but the intricacies can be confusing. Six in ten (61%) know that private assets require special tax reporting. And while 56% say they are interested in private investments, they are worried about liquidity. But only half know that private investments require long holding periods. Another 58% think that private assets are priced daily, which they aren’t – a key point of distinction from public markets.

But the biggest point of distinction comes in knowing who can actually invest. Overall, 60% of investors surveyed believe they are eligible to invest in private assets. But there are significant differences between Europe, Asia, Latin America, and the US when it comes to private investing.

Europe:
LTIF and LTAF fund structures are democratizing private assets, giving investors access to the market through evergreen funds, offering some degree of liquidity. This is why 46% of investors have already invested.

Latin America:
The region’s regulatory environment encourages private investment with bilaterial investment treatise to help safeguard private investments and enhance fiscal-rule compliance. Coupled with the region’s infrastructure needs and demand for private financing indicates why 53% of investors there are invested.

Asia:
Regulatory frameworks in many countries can be complex and restrictive. And a less robust private market overall has limited private investment among those in the region to just 29%.

The US:
Private investment is often limited to sophisticated institutional investors and accredited investors who meet financial and other requirements. That is why only 24% of those surveyed in the US are currently invested. Based on the asset-level qualifications alone, US investors are confused about who is eligible to invest: 63% of those with $501,000–$1M in investable assets think they’re eligible, as do 66% with $300,001–$500,000, and even 54% of those with $100,000–$300,000.

Individuals are not invested in AI

Recent developments in artificial intelligence (AI) and a rally in cryptocurrencies are putting technology front and center in market conversations. While investors see that AI has the potential to dramatically reinvent how business operate, their sense of the investment opportunity is more subdued. Similarly, the recent rally in Bitcoin has investors interested, but only 36% say they will invest more or begin to invest in cryptocurrencies this year.

Cryptic about crypto

Driven in large part by what’s perceived as a more supportive regulatory outlook and growing institutional investment in the asset class, Bitcoin reached the $100,000 mark in December 2024. Despite being aware of the resurgence, investors are not ready to jump in headfirst.

But that doesn’t mean there isn’t any interest. Overall, 32% of investors globally say they invest in crypto. And 51% believe Bitcoin will reach yet another new high in 2025.

Those who don’t invest have some regrets, as 42% of those surveyed felt like they missed the boat on crypto investments.

Investors think there still may be opportunity, however, as 44% say new vehicles – such as crypto ETFs – will make the asset class a more attractive investment. Just as they have a reserved view on this asset class, investors show restrained enthusiasm for AI.

Cool on the AI opportunity

In looking at the potential impact of AI, 70% of those surveyed think it will revolutionize how the world does business. But two- thirds (66%) see it as a helpful tool and not much more. That view comes across loud and clear in terms of how the AI investment opportunity is perceived.

Professional investors are optimistic about the opportunity: 79% of wealth managers say AI has the potential to accelerate earnings growth for the next decade,5 and 63% of institutional investors say it will supercharge tech growth in 2025.6 Individual investors are not as excited. Just 42% are willing to say it’s the biggest investment opportunity in a lifetime.

They are a little more skeptical of the hype than the professionals too. Where just 42% of institutional investors think the rapid run-up in AI stocks is a bubble, 51% of investors globally and 62% in the UK say AI is a bubble waiting to burst.

51% of investors think AI is a bubble waiting to burst

This more restrained take on the investment opportunity is also reflected in their thoughts on how AI will impact their lives. Despite societal concerns about AI replacing workers, only 36% see it as a threat to their livelihood.

However, some investment professionals may be concerned about being replaced: 46% of investors globally say that advances in AI make them more likely to use automated advice – a point that gives credence to the 52% of wealth managers who said earlier this year that AI is helping to make robo-advice a meaningful competitive threat.

Fortunately, individuals are more likely to trust their advisor (91%) than even themselves (88%) when making a financial decision.

About the survey

Natixis Investment Managers, Global Survey of Individual Investors, conducted by CoreData Research in February and March 2025. Survey included 7,050 individual investors in 21 countries.

Disclosure

² Natixis Investment Managers, Global Survey of Financial Professionals, conducted by CoreData Research between June and August 2024. Survey included 2,700 respondents in 19 countries.

³ Natixis Investment Managers, Global Survey of Individual Investors, conducted by CoreData Research in March and April 2023. Survey included 8,550 individual investors in 23 countries.

⁴ Natixis Investment Managers, 2020 Global Survey of Financial Professionals, conducted by CoreData Research March and April 2020. Survey included 2,700 financial professionals in 16 countries.

⁵ The 2025 Natixis Investment Managers Wealth Industry Survey was conducted in December 2024 and January 2025 and included 520 individuals in 20 countries throughout North America, Latin America, the United Kingdom, Continental Europe, Asia and the Middle East.

The views and opinions expressed may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted.

Actual results may vary.

All investing involves risk, including the risk of loss. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

Natixis Distribution, LLC is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.

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