What You Need to Know
- The survey found 70% of investors perceived technological transformation as a top theme over the next six months.
- Overall, 69% of investors surveyed were optimistic about their region’s economy in the next 12 months.
- And 61% of U.S. investors expected inflation to rise in the next three years, the highest of any region.
Cash forms 22% of individual investors’ portfolios globally, down just 3 percentage points since September, according to UBS’s quarterly investor sentiment survey, released Wednesday.
UBS noted that the high cash weightings contrast with positive market and economic developments over that period — the rally in stocks, rollout of vaccines and improvement in economic indicators.
However, 41% of investors surveyed said they are considering increasing their exposure to stocks in the next six months, compared with 12% who intend to cut their exposure and 47% who wish to keep their portfolios the same.
Seventy percent of investors perceived technological transformation as a top theme over the next six months. Sixty-four percent said stocks are an effective way to diversify portfolios during the recovery, and 63% viewed sustainable investing as a promising opportunity.
Three in 4 respondents expressed some or a lot of concern that cash will take a performance hit if inflation rises too much. Forty-one percent said they would increase their stock holdings in that scenario, and 31% said they would increase their real estate positions.
“Investors’ cash holdings are still far higher than our recommended allocations, especially given the current market and economic environment, so it is encouraging that they are looking to invest more in equities,” Tom Naratil, president of UBS Americas and co-president of UBS Global Wealth Management, said in a statement.
“If inflation picks up, the value of cash will be eroded in real terms, and investors will be forced to look to other asset classes to help meet their financial goals.”
Iqbal Khan, president of UBS Europe, Middle East and Africa and co-president of UBS Global Wealth Management, noted in the statement that UBS expects sustainable and thematic investments to remain an important means of diversifying portfolios away from traditional stock and bond allocations.
UBS conducted the survey from March 30 to April 18 among 2,850 investors with at least $1 million in investable assets and 1,150 business owners with at least $1 million in annual revenue and at least one employee other than themselves. The global sample was drawn from 14 markets: Argentina, Brazil, France, Germany, Hong Kong, Italy, Japan, mainland China, Mexico, Singapore, Switzerland, the UAE, the U.K., and the U.S.
Overall, 69% of investors in the survey were optimistic about their region’s economy over the next 12 months, compared with 60% in the poll taken three months ago. Seventy percent were optimistic about the stock market outlook for the next six months, compared with 61% in the previous survey.
In addition, 80% of business owners were optimistic about their own business on a 12-month view, versus 72% three months ago. Thirty-seven percent planned to hire more, up five points, compared with 13% who were preparing to downsize, down four points.