Here’s why small-time investors may be overoptimistic

Concerned over credit market liquidity: Schroders Exec

Retail investors across the world may be in for a disappointment, hoping that lower-risk assets will land them with high returns in the year ahead, according to a survey by Schroders.

In its latest global investment survey, the asset management company found that retail investors were expecting "challenging" average returns of 12 percent over the next 12 months, but were looking to place only around one-fifth of their portfolios in high risk/return assets such as stocks.

"There is a very significant disconnect between their expectation of return and their attitude to risk," Massimo Tosato, executive vice chairman of Schroders, told CNBC early on Wednesday.

Schroders surveyed 20,000 retail—or private individual—investors across 28 countries and found that nearly half of their funds were signposted for low risk-return assets such as cash. Around one-third was seen being placed in medium-risk assets such as bonds.

The people surveyed were also biased towards short-term investing, with almost half preferring to invest with an up to two-year timeframe.

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"If you invest for the short term and you chose low risk assets, it is quite difficult that you receive a 12 percent return," Tosato told CNBC.

"There is a difference between expectation and their actual behavior and that tells us a lot about the level of knowledge and understanding."

Nonetheless, less than one-quarter of investors surveyed planned to seek professional financial advice and more than one-third planned to simply invest as they had done in previous years.

Stocks and bonds across the U.S., Europe and Asia slid on Tuesday, while Brent and WTI crude oil rallied.

Tosato said that this was symptomatic of the start of the "bumpy" road facing bond markets as interest rates around the world begin to normalize.

"I think that for retail investors that have piled up into credit securities in search for income, they have taken on more risk maybe without realizing it."

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