Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA, May 3, 2022.
Brendan McDermid | Reuters
According to a new survey, wealthy investors are more likely to add to their equity holdings or leave certain sectors than to sell if stocks continue to decline.
According to the UBS Investor Sentiment survey, more than one in four, or 26%, of US millionaire investors surveyed said they would increase their investments if financial markets fell further. Only 19% said they would cut their investments and 25% said they would not make any changes.
The survey, conducted of 900 investors and 500 entrepreneurs with at least $ 1 million in investable assets, found that 30% of investors said they would switch sectors if markets collapse. When asked about the likelihood they would invest in certain asset classes, the highest number, 37%, said that stocks. They also plan to invest more in commodities, with 32% in favor of gold and 31% in favor of oil.
“I think it’s another case where investors do a good job without overreacting,” said Jeff Scott, head of client information at UBS Global Wealth Management. “It doesn’t mean they won’t make tactical changes. But they’re not running out as the market has declined. We encourage people to have a financial plan and stick to it.”
Sure, the investor survey was conducted between April 5 and April 18, before more recent markets dipped. Yet wealthy investors don’t seem to be loading any more money. Average liquidity and cash equivalents actually fell slightly to 19% of investable assets, compared to 20% in the Investor Sentiment in February.
Those who hold a large amount of money are concerned about the effects of inflation. Among those who hold more than 10% of their assets in cash, two-thirds are “very concerned about the impact of inflation on the real value of their cash,” according to the survey.
Most investors cite inflation as a major investment concern, just behind politics and geopolitical risk. A majority, 51%, also said volatility is higher than usual, with the S&P down 13% so far this year and the Nasdaq down 21%.
As market swings, concerns about rate hikes and inflation take center stage, Scott said wealthy investors are taking comfort in easing fears of Covid-19.
“The pandemic isn’t over, but there seems to be a greater sense of returning to normal,” he said. “At least in the US this is somehow offsetting growing concerns about Russia, Ukraine and inflation.”