Asia-Pacific investors may be at risk of falling short of their long-term financial goals, with more than half ( 52% ) of their investable assets held in cash, highlighting a growing “aspiration-action gap” where investor confidence and return expectations are not matched by how portfolios are positioned in practice, according to a new report.

On average, 52% of investable assets of investors in the region are held in cash, with more than a third ( 36% ) in cash savings accounts and the remainder sitting within investment portfolios, Fidelity International says in its study, which was based on a survey of 13,000 retail investors across Asia-Pacific and Europe.

Average total cash level held by an investor 

Source: Fidelity International

Cash holdings are largely driven by practical considerations. While most APAC investors cite maintaining an emergency fund ( 43% ) as the primary reason for staying in cash, investors in Taiwan ( 28% ), mainland China ( 23% ) and Hong Kong ( 22% ) are waiting for better market conditions, and investors in Japan ( 16% ) do not want to risk losing money.

However, this cautious positioning sits alongside ambitious expectations. APAC investors are targeting average annualized returns of 8.6% over the next five years, and 64% are confident they will achieve their financial goals, suggesting a mismatch between expectations and current portfolio positioning.

Expected annualized return over the next five years 

Source: Fidelity International

“While it is encouraging that investors feel confident about meeting their long-term goals, our findings suggest this confidence is not always reflected in how portfolios are positioned,” says Charlotte Chan, head of HK global platform solutions and head of Hong Kong at Fidelity International. “Holding large amounts of cash may feel like a safer option, but over time it can limit the ability to generate the returns needed to meet long-term objectives. 

“This is the ‘aspiration–action gap’, where expectations are not aligned with investment decisions. Closing this gap starts with a clearer understanding of the relationship between risk and return, and how asset allocation drives outcomes. Investors need to ensure their portfolios are aligned with their goals, and that their expectations reflect how their money is actually invested.” 

Cash drag 

According to Fidelity’s Capital Market Assumptions ( CMA ), a forward-looking estimate of how investments are expected to perform over the long term, holding higher levels of cash can materially reduce long-term returns, potentially leaving investors more than 40% short of their expected outcomes over 10 years. 

The firm estimates that a fully invested cash portfolio gets 3% return annually over 10 years, or zero return after inflation. By moving cash to a balanced portfolio ( 60% equities and 40% bonds ), the estimated annualized return is 6.1%, or 3% after inflation.

Impact of cash on long-term savings over 10 years

Source: Fidelity International

“Markets have performed strongly in recent years, but volatility has returned, and the outlook remains uncertain,” Chan says. “Our analysis shows investors can’t rely on past returns to continue, and expectations of around 8% a year may be too optimistic in today’s environment. 

“However, holding a large proportion in cash risks delivering negative real returns once inflation is taken into account. Staying invested and maintaining exposure to growth assets remains key to improving the chances of meeting long-term goals.” 

Encouragingly, many APAC investors recognize the need to put cash to work. When asked where they would reallocate, 51% of investors would move into equities, 31% would consider bonds, and 32% would consider commodities.

Closing the gap 

Closing the gap between expectations and outcomes will require both stronger investor support and an environment that encourages long-term investing. Nearly half ( 45% ) of APAC investors value regular income and capital growth equally for their investment.

Importantly, investors indicate what would prompt them to move money out of cash. A lower return environment for cash savings, more education on how and what to invest, access to professional financial advice, and better tax incentives are seen as key triggers to shift towards investing.

Chan says: “Many investors are holding cash for understandable reasons, whether that’s for short-term needs or waiting for the right moment to invest. But over time, holding too much cash can work against them, especially when they are targeting strong long-term returns. The risk is that staying on the sidelines for too long means missing out on growth. When time is on your side, moving from cash to a balanced portfolio shows a real difference in annualized real return.

“The focus should be on putting excess cash to work in a way that’s aligned to long-term goals, within a well-diversified portfolio. Having the right support, including financial advice where appropriate, can give investors the confidence to take that next step. Ultimately, closing the ‘aspiration-action gap’ means turning intent into action, putting more cash to work, staying invested, and aligning portfolios with long-term goals.”