Investors around the country see the economic picture looking brighter. But how much brighter depends, in part, on where they live.
Affluent investors in a new poll released Monday by Morgan Stanley Wealth Management expressed broad optimism about the prospects for their portfolios, growth of the U.S. and global economies and their ability to reach their financial goals.
The poll, conducted between January and March, surveyed 1,000 U.S. investors, ages 25 to 75, with $100,000 or more in investable household financial assets. A third of interviewees had $1 million or more in household financial assets, and a third lived in the metropolitan areas of Boston, New York, Atlanta, Chicago, Houston, Denver, Los Angeles or San Francisco.
The study ranked those cities by their bullishness compared with attitudes nationwide on these six areas:
- The global economy: Nationally, 72% of respondents were bullish on the global economy, but 87% said they were concerned about increased foreign conflicts.
- The national economy: Sixty-six percent were optimistic about the U.S. economy. But 88% said they were concerned about the federal budget deficit. Other chief concerns were the nation's economic prospects (86%), inflation (80%), a sovereign-debt downgrade (80%) and terrorism (79%)
- The state economy: Seventy-seven percent of investors were bullish about their state economies.
- The investment climate: Nationally, 86% of respondents expected their investment portfolio to be “better” or “the same” at year end.
- The investment portfolio: Asked to identify “good” investment prospects for 2013, investors liked gold (48%) dividend-bearing stocks (46%), S&P 500 index funds (45%) and mutual funds and ETFs, (41%). Only 26% called Treasures a “good” investment, and just 22% favored various kinds of municipal bonds in their home states.
- Financial well-being: Eighty-six percent of respondents believed their financial well-being would be the same or better at year end.
Here are the eight cities, ranked in order from least to most bullish:
8. Atlanta—19 percentage points less bullish than the national average
Only 34% of Atlanta investors saw housing prices rising versus 41% nationally, and 31% saw home prices decreasing versus 20% nationally. Fully 64% of those surveyed said foreclosures had affected their neighborhoods, compared with 43% nationally.
Houston’s high-net-worth investors said energy made up a fifth of their investment portfolio, with about half in oil, a fourth in natural gas and the rest in alternative or renewable sources. Fifty-three percent saw great potential in natural gas, 47% in oil and 24% in alternative or renewable sources.
6. Chicago—11 percentage points less bullish than the national average
Chicago investors were by far the most bearish nationally on their state economy. Ninety-three percent cited the financial well-being of Illinois as a concern, and 80% were “very concerned.” Nationally, this was not named as a top concern.
5. Denver—5 percentage points less bullish than national average
Mile High City investors were bullish on housing, with 64% seeing increases in local housing prices compared with 20% seeing decreases.
Investors in the tristate area (New York, New Jersey and Connecticut) were more bullish on prospects for the national economy, with 74% predicting it would be better or the same at year end, versus 66% nationally. Eighty-one percent considered prospects for the local economy better or the same.
Los Angeles investors saw “good” opportunities in technology (76%), energy (65%), biotech (65%), communications (59%), real estate (58%) and pharmaceuticals (58%). But only 32% considered entertainment, one of the largest local industries, a “good” opportunity, and 46% were neutral.
2. Boston—27 percentage points more bullish than the national average
Boston area retirees were less satisfied with the results of their investment portfolio, with 48% saying performance was worse than expected, compared with 36% nationally.
1. San Francisco—More bullish than average by 56 percentage points
Thirty-seven percent of high-net-worth investors in the home of Silicon Valley said they had invested in a startup, but only 23% planned to do so in the next three years. Bay Area investors said innovative ideas were the most important consideration for investing, startup or not, followed by strong financial backing.
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