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Legg Mason: Investors' expectations don't reflect bond market reality

When it comes to generating income from investments, Americans' expectations for returns are significantly higher than what they are actually earning, according to a survey released this morning by Legg Mason Inc.

“Our survey is telling us that income-oriented investors in the U.S. are coming up well short of their goals — almost 3 percent short — and that number could be significant especially for retired investors who need to live on the income their portfolios generate,” said Legg’s Matthew Schiffman in a statement.

According to the Legg survey, investors want a 8.5 percent annual return — who doesn’t? — but on average are getting 5.9 percent. The Baltimore-based money manager surveyed more than 3,000 affluent investors from 13 countries. The results about U.S. investors’ views come from 500 individuals with at least $200,000 in investable assets.

Though Americans aren’t getting quite the returns they want from bonds and other income-producing products, that hasn’t dampened their spirit.

According to Legg, U.S. investors are the second most optimistic investors, just behind Hong Kong investors. Seventy-four percent of U.S. investors say now is a good time to be in the stock market, compared with 82 percent of those in Hong Kong.

Americans’ portfolios contain the largest percentage of equities — 39 percent — with Canadians coming in second with 35 percent of holdings in stocks.

Germans are the most bullish about real estate, while the Chinese are the most keen on fixed income, Legg found.

Americans are the least likely to invest internationally in income-generating assets. They cited global uncertainty, too much risk and lack of transparency for their hesitancy, Legg said.

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