Canadian investors continue to flock to cash as market volatility persists, even though most believe their cash holdings will produce a negative return, research from BlackRock Asset Management Canada Ltd. suggests.

A survey recently commissioned by BlackRock’s iShares exchange traded fund (ETF) business reveals a high level of anxiety among investors. Of 551 investors with at least $100,000 in investable assets who were surveyed, more than two-thirds indicated that they feel “much less confident” about the investment decisions they make now than they did in the past.

A growing proportion of investors believe that market conditions offer diminishing prospects for positive returns, and consequently, their top priority has become protection of their assets. Many are turning to cash, even though they acknowledge that such an approach won’t necessarily protect the value of their investments.

Indeed, 67% of all investors surveyed said they expect a guaranteed negative return from such an approach.

“Investors are unsure what to do with their money in this new world where the returns they once took for granted are constrained by low yields, market volatility and shifting investment patterns,” said Mary Anne Wiley, managing director and head of iShares at BlackRock Canada. “Holding cash is not the answer and people are starting to look beyond the traditional 60/40 split in devising a more dynamic portfolio.”

A high level of perceived company-specific risk appears to be driving much of the market anxiety. Investors indicated that they’re nervous about corporate surprises, accounting concerns and poor earnings reports – all of which they believe have become more commonplace.

Investors have also become noticeably more sensitive to fees and other costs that reduce their overall investment returns, according to the survey. Eight out of ten respondents said they consider fees to be ‘very important’ to their investment decision-making.

“Investors are looking for better and less costly solutions as returns become more difficult to achieve,” said Wiley.

Other top investment considerations include portfolio diversification, minimizing losses, generating income and earning dividends.

Interestingly, the survey found that high net worth investors – those with more than $250,000 in investable assets – are more likely than other investors to seek liquidity. High net worth investors are also more likely to seek diversification by sector, and are somewhat more interested in investing in foreign markets.