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Survey

HNWIs confident they will beat or match the market in 2013

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More than three-quarters (77 per cent) of high-net-worth investors (HNWIs) expect to beat or match the market this year with approximately half (48 per cent) feeling the stock market is appropriately valued and 17 per cent feeling it is undervalued, according to a survey by Fidelity.

 
At the same time, 70 per cent of investors are concerned about the Federal Reserve reducing support for the bond market and, as a result, 88 per cent of these investors are holding an average of 20 per cent of their portfolio in cash for the right opportunity to invest.
 
"Investors feel optimistic that the economic recovery in the US is under way, yet the memory of the market downturn is causing that optimism to be tempered," says John Sweeney, Fidelity executive vice president, retirement and investing strategies. "As investors feel more certain about job growth, encounter strong corporate earnings and better understand fiscal policy changes, they will invest in the market with more confidence. That confidence leads to better decision making and enables investors to withstand volatility in the market.
 
"It is even more critical that investors create an investment plan to help them identify the appropriate exposure to equities that is right for them. Investors then should contribute to their portfolio regularly in up and down markets, and revisit their plan frequently to ensure it is working to meet their goals."
 
The survey was taken during a "Fidelity Viewpoints: Inside/Out" event in Boston on 18 June, which also was broadcast to select Fidelity Investor Centers and via webcast. The event is part of Fidelity’s ongoing education effort designed to provide investors greater access to market insights from experts both inside and outside Fidelity.
 
Other key findings of the survey include:
 
Market gains in 2013 – high-net-worth investors are increasingly optimistic about future gains in the market. In fact, 81 per cent believe the Dow Jones Industrial Average will be up at the end of 2013.
 
Stock market valuations – almost half (48 per cent) of high-net-worth investors believe the stock market is appropriately valued, and 17 per cent believe it is undervalued. This may be why the majority (78 per cent) of high-net-worth investors prefer stocks over high-yield bonds.
 
Quantitative easing concerns – looking ahead, 70 per cent of high-net-worth investors worry the Federal Reserve’s end of quantitative easing threatens to depress stocks.
 
Housing market gaining strength – more than three-quarters (77 per cent) say the housing market will have a positive impact on the overall economy for the remainder of 2013.
Investors on Investment Performance and Guaranteed Income
 
Allocation winners – for the year to date, 39 per cent of high-net-worth investors say asset allocation has been the primary driver of their investment performance and 21 per cent say sector allocation.
 
Importance of guaranteed income – four in 10 (40 per cent) of these investors say income products, such as annuities, are important to them to provide a steady payment in retirement.
 
Tax increase reactions – 32 per cent of these investors already have made modifications to their investment strategy as a result of income tax increases, and 21 per cent plan to make some modifications. Still, 41 per cent do not plan to make any changes.
 
Hedging against volatility – 53 per cent of high-net-worth investors are concerned about volatility as it impacts their portfolios, while 32 per cent are focused on combating inflation.

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