Investors don’t see it coming, despite a nearly 10-year run and a recent spate of market volatility. But if the bull market comes crashing down, it’s going to find lots of investors taken by surprise.
According to the annual Legg Mason Global Investment Survey, close to half of investors say they intend to boost active fund allocations over the next five years, and 66% of respondents say they expect U.S. equity markets to rise over the next 12 months; 29% predict a significant increase.
And optimism reigns; overall, 69% said they are “confident” about their investments over the next 12 months, with 28% reporting being “very confident.”
Holdings are diverse, but investors report owning 27.6% equities; 22.2% cash; 21.2% fixed income; 12.6% real estate; 10.7% alternatives; and 5.7% gold/metals.
Nobody reported owning cryptocurrencies, and this was the first year that the survey inquired about them. But 28% of millennials said they were among the best ways to invest.
The home-market prejudice reigns, with investors more likely to stick with U.S. equities than to venture abroad to sample international and emerging markets. When making investment decisions, only 8% said that country or region was on their radar — at the very bottom of the list.
However, “Investors also should bear in mind that 75% of global GDP comes from outside the U.S.,” Elisa Mazen, portfolio manager of the Legg Mason-affiliated ClearBridge International Growth Fund, says in a statement.
Mazen adds, “We can access great minds, technology innovation, attractive demographics, growth rates and valuations in many regions. This can bring opportunity for sustainable long-term growth.”
Investors are also favoring active over passive investments, with millennials in particular saying they have 60% allocated to active strategies.
Millennials also report pain from the financial crisis, with 56% saying that their decision-making is affected by that period. Unlike other generations, millennials tend to hold more assets in cash than in equities.
— Check out More Evidence Active Management Won’t Outperform in Volatile Markets on ThinkAdvisor.