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High net worth investors bullish on prospects for 2014, says survey


Despite significant concerns over the US economy, budget deficit and geopolitical tension, high net worth investors are expecting a good year in 2014.

According to the Morgan Stanley Investor Pulse Poll 88 per cent expect their financial wellbeing to be better or the same as in 2013, 84 per cent expect their investment portfolios to be the better or the same and 70 per cent see a better/same investment climate.
“The experience of 2013 has not been lost on investors,” says Gregory J Fleming, president, Morgan Stanley Wealth Management and Morgan Stanley Investment Management. “Despite a great deal of economic uncertainty, equity markets performed strongly as expectations accelerated for economic growth, and investors are looking for more of the same in 2014. Equities remain the favoured asset class, technology is viewed as the best sector in 2014, and the US the best place to invest.”
Despite their overall bullishness, economic concerns linger – 90 per cent of investors are very or somewhat concerned about prospects for the US economy, 87 per cent about the government budget deficit, 82 per cent about increased foreign conflicts, 81 per cent about the US trade deficit, and 75 per cent on the effects of terrorism on the nation.
Unemployment is not a great concern for 2014. Only 48 per cent of investors say they are very or somewhat worried about stability of their employment. Similarly, only 28 per cent worry about being a financial burden on their children, or having their children be a financial burden on them (27 per cent).
Investors expect to end 2014 with the largest portion of their portfolio, 42 per cent, dedicated to equities (including stocks, mutual funds and ETFs). Cash will be the next highest allocation at 23 per cent, followed by fixed income at 23 per cent, followed by all other investments (13 per cent). Millionaire investors say they will commit an even higher allocation, 50 per cent, to equities. Dividend bearing stocks and various index funds (S&P 500, Dow Jones Industrial Average) are favoured as good investment prospects by the highest percentages of investors. Perhaps reflecting some continuing caution, gold is seen as a “good” (42 per cent) or “neutral” investment (34 per cent) by three-quarters of investors.
Technology is seen as the top investment sector by high net worth investors, with 72 per cent seeing it as a good place to put their money in 2014. Bio-tech follows at 67 per cent, followed by energy (66 per cent), pharmaceuticals (61 per cent) and communications (54 per cent). Millionaires are relatively more bullish than lower net worth investors on financial services, healthcare, industrial and the consumer discretionary sectors.
US Investors plan to stay focused at home this year, with 52 per cent favouring the US as a place to invest. This is followed by China (41 per cent), India (39 per cent), Japan (38 per cent) and Brazil (34 per cent). The Middle East and Russia have the highest negatives as places to invest, with “bad” ratings of 67 per cent and 54 per cent, respectively.

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