Ultra-High-Net-Worth Investors Express Optimism in Our Exclusive Survey | Capital Group

  • About Our Firm
  • What Sets Us Apart
  • Wealth Planning
  • Latest Perspectives
  • Contact Us

Ultra-High-Net-Worth Investors Express Optimism in Our Exclusive Survey

There’s been a lot of discussion lately about the challenges facing the global economy. Growth is lagging in many parts of the world, geopolitical threats are rising and uncertainty clouds the U.S. presidential race. Through it all, however, ultra-high-net-worth investors remain decidedly upbeat about the prospects for both the economy and their own portfolios, according to a just-released survey by Capital Group Private Client Services.

Among the survey’s more notable findings: Wealthy investors are distinctly hopeful about the country’s economic path. Nearly two-thirds describe themselves as optimistic about the economy, and more than 80% plan to allocate more money to stocks in the coming year. That’s nearly twice the percentage of those who plan to earmark money for fixed income, according to the poll.

The survey comes as U.S. equities have been hovering near all-time highs. The market suffered a pair of declines earlier in the year amid worries about global growth. But steadily rising U.S. employment and consumer spending have sparked hope among investors. Even with the market’s solid showing so far this year, survey participants feel further gains are ahead, with 64% saying that stocks are likely to outpace other asset classes over the next 12 months. Confidence in equities is also reflected in feelings toward market volatility. Despite the brief but painful sell-offs that have hit stocks in recent years, four in five respondents say they intend to remain fully invested in equities during periods of volatility.

“Investors know the stock market will encounter occasionally sharp setbacks, but they believe the best strategy is to sit tight during those times because overreacting can damage investment results over the long term,” observes Bob Kelly, national director for Capital Group Private Client Services.

Investors have confidence in real estate and the housing market.

Beyond stocks, housing has made a big comeback in recent years. The survey suggests this optimism for real estate continues, with nearly half of ultra-high-net-worth investors saying they plan to buy a vacation home in the next 12 months. And while sentiment was robust nationwide, it was particularly pronounced in some pockets of the country. For example, one-quarter of those polled in Chicago and Los Angeles say they’ll invest in real estate. But in fast-growing Atlanta, more than 40% of people plan to do so. As for vacation homes, 40% of people in the Los Angeles area say they plan to buy a getaway place in the coming year. That number jumps to 60% in New York, where apartment and condominium living is common.

Ultra-high-net-worth investors also are enthusiastic about so-called passion investments, such as art, wine and collectible cars. Survey respondents plan to invest in all three areas in the coming 12 months. But while the appeal of these nontraditional investments is high, relatively few investors view them as a way to make money. In fact, nearly two-thirds say they are drawn to passion investing as a hobby rather than as a source of potential profit.

Though the opinions of men and women were evenly matched for most questions, gender differences stand out in a handful of areas. For example, women much prefer investing in art (36% vs. 22% for men), while men favor wine (28% vs. 17%) and collectible cars (14% vs. 9%). Gender disparity also shows up in the willingness to take risks, with women expressing far greater caution than men. Roughly 52% of women say they are likelier to invest in bonds than stocks, vs. 40% for men.

Wealthy investors also have clear preferences about how their finances are managed. A full 78% of respondents say they would not consider having their money handled solely by a robo-advisor, or a web-based computer program that makes decisions based on pre-programmed algorithms. “The concerns about robo-advisors are not surprising given that the needs of ultra-high-net-worth investors extend far beyond basic investment advice,” explains Michelle Black, head of our Wealth Advisory Group. “They prefer face-to-face interactions with experienced advisors who can provide sophisticated planning solutions.”

When asked about their personal objectives and how they plan to spend their wealth, almost all respondents say they plan to contribute a portion of their income to education, with community and nonprofit organizations, religious causes and medical research also receiving money. And what do the nearly 600 respondents enjoy most about having wealth? At the top of the list: the peace of mind it provides.

To access the full survey, click below: