High-net-worth investors expect to climb a wall of worry in 2014, according to a poll survey by Morgan Stanley conducted during the fourth quarter of 2013 of high net worth investors, a third of whom represent US households with investible assets of US$1 million or more.
Despite significant concerns over the US economy, budget deficit and geopolitical tension, investors are expecting a good year in 2014 by large majorities:
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The overall sample provides a highly detailed look at the attitudes of a demographic that accounts for 94% of total household investible assets by value2.
Gregory J. Fleming, president, Morgan Stanley Wealth Management and Morgan Stanley Investment Management, said: "The experience of 2013 has not been lost on investors. Despite a great deal of economic uncertainty, equity markets performed strongly as expectations accelerated for economic growth, and investors are looking for more of the same in 2014. Equities remain the favored asset class, technology is viewed as the best sector in 2014, and the U.S. the best place to invest."
Direction of US Economy and Federal Budget Deficit Top Concerns
Despite their overall bullishness, economic concerns linger. Fully 90% of investors are very or somewhat concerned about prospects for the US economy, 87% about the government budget deficit, 82% about increased foreign conflicts, 81% about the US trade deficit, and 75% on the effects of terrorism on the nation.
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By GlobalDataUnemployment is not a great concern for 2014. Only 48% of investors say they are very or somewhat worried about stability of their employment. Similarly, only 28% worry about being a financial burden on their children, or having their children be a financial burden on them (27%).
Equities Lead Expected Asset Allocation
Investors expect to end 2014 with the largest portion of their portfolio, 42%, dedicated to equities (including stocks, mutual funds and ETFs). Cash will be the next highest allocation at 23%, followed by fixed income at 23%, followed by all other investments (13%).
Millionaire investors say they will commit an even higher allocation, 50%, to equities. Dividend bearing stocks and various index funds (S&P 500, Dow Jones Industrial Average) are favored as good investment prospects by the highest percentages of investors. Perhaps reflecting some continuing caution, gold is seen as a "good" (42%) or "neutral" investment (34%) by three-quarters of investors.
Technology Seen as Top Sector
Technology is seen as the top investment sector by high net worth investors, with 72% seeing it as a good place to put their money in 2014. Bio-tech follows at 67%, followed by energy (66%), pharmaceuticals (61%) and communications (54%).
Millionaires are relatively more bullish than lower net worth investors on financial services, healthcare, industrial and the consumer discretionary sectors.
US Viewed as Top Place to Invest
US Investors plan to stay focused at home this year, with 52% favoring the US as a place to invest. This is followed by China (41%), India (39%), Japan (38%) and Brazil (34%). The Middle East and Russia have the highest negatives as places to invest, with "bad" ratings of 67% and 54%, respectively.
