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Portfolio > Portfolio Construction

Most Investors Not Shifting Portfolios Ahead of Rate Hike: Morgan Stanley

By Michael S. Fischer

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Morgan Stanley Wealth Management’s latest Investor Pulse poll, released Wednesday, finds that 62% of retail investors and 75% of millionaires expect the U.S. Federal Reserve to raise interest rates by the middle of next year.

Among respondents predicting a rate hike, 38% looked for an increase of 0.5% and 24% a rise of 0.25%. Fourteen percent were unsure of the magnitude.

During the summer, Morgan Stanley surveyed 1,000 U.S. households with at least $100,000 in investible assets, one-third of which had investible assets of $1 million or more.

Asked what actions they were taking ahead of a possible rate increase, 55% of respondents, including millionaires, said they were not changing fixed income allocations, selling real estate investments or otherwise fine-tuning their investment portfolios.

At the same time, 19% said they had paid off consumer debt, 11% had bought a car or other big-ticket item and 10% had refinanced a mortgage.

Investors were mixed in their view on whether a rate hike would be good or bad for the economy, with 31% saying good, 24% bad, 23% neither good nor bad and 22% unsure.

According to the poll, 57% of respondents had at least some concern that prolonged low interest rates had produced a consumer asset bubble, but only 12% said this was a major concern.

Investors’ economic outlook was positive. Seventy-six percent of survey participants expected the global economy to be the same or better over the next 12 months, and 78% had this expectation of the U.S. economy.

— Check out Preparing Clients for Fed Interest Rate Hike on ThinkAdvisor.

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