Optimism is increasing among high net worth and ultra-high net worth investors after the victory of Donald Trump in the recent US presidential election, according to a report by UBS Wealth Management Americas (WMA).
Following the result of the election, 48% of investors said that they feel optimistic about the short-term economic outlook, a rise from 39% three weeks ago.
The increase in optimism was mainly due to a rise in optimism among Trump supporters that outweighed a decline among Clinton supporters, the UBS Investor Watch noted.
Optimism in the stock market following Trump's election also recorded a rise, with 53% anticipating positive returns for the S&P 500. Before the election, only 25% expected positive returns over the next six months in the event of Trump’s selection.
According to the study, Trump’s positioning as an outsider to the Washington establishment played a significant role in his election, with 90% of wealthy investors holding the view that Washington was in need of disruption.
Pre-election, half of investors moved to protect their money, with 30% increasing cash, 25% shifted to a more conservative asset allocation, and 23% cutting back on spending (23%). Only 9% increased investments in the stock market before the election.
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After Trump’s victory, the number of investors intending to shift to a more conservative allocation has dipped to 15%, while those planning to increase stock market investment almost doubled to 17%.
Also, four in ten investors plan to make changes to their portfolios, mostly based on their political preferences.
The study further revealed that 33% of Trump supporters plan to increase investments in the US stock market, while 25% plan to increase personal spending (25%). Twenty eight percent of Clinton supporters are raising cash, while 27% are shifting to a more conservative allocation.
Of investors holding cash for a buying opportunity, 63% are waiting for a market dip prior reinvesting. Also, 40% are waiting for more clarity on policies of Trump.
Following Trump's election, 73% of his supporters said that they are most enthusiastic about fewer regulations, 70% said that they are hopeful about a greater sense of national security, and 62% are hopeful about better infrastructure.
One third of investors, which included 46% of Trump supporters, expect a decrease in their taxes after Trump’s election.
On the other side, with Trump as president, Clinton supporters are mainly worried about uncertainty about what he will do in office, the rest of the world viewing America negatively, and the potential for an economic recession.
However, all investors are concerned about Trump's temperament, with engaging in personal attacks, starting another war, and failing to accept criticism gracefully cited as Trump’s biggest potential mistakes by 60%, 58%, and 46% of investors, respectively.
Further, 57% of investors seek advice on the election's portfolio implications with a financial advisor, mainly on matters of their overall asset allocation, financial planning and how Trump's policy changes might affect them.
Of those who have already discussed the election with their advisor, 84% said that they feel more confident about their portfolios, while 85% said that they are less likely to make an emotion-based financial decision.
UBS WMA client strategy officer Paula Polito said: "Before the election, we saw many investors adopt a defensive stance, raising cash and moving away from stocks. With the election behind us, many investors are looking ahead with a growing sense of optimism about the economy and the markets."