Investors see better days ahead — but standing pat now: BlackRock

Fiscal cliff, asset allocation are biggest worries, survey finds

Nov 1, 2012 @ 10:40 am

By Jason Kephart

Most investors are upbeat about the stock market's prospects over the next six and 24 months — no matter who wins the election — but they're not optimistic enough to take on more risk, according to a new survey by BlackRock Inc.

More than half of of 671 high-net-worth investors polled by the money manager said they were optimistic about the market over the next six months. That number jumped to 62% when asked about the next 24 months, according to the survey, which was taken in late September and involved investors who work with an adviser.

Despite their long-term optimism, 56% of investors said they are keeping their asset allocation in a holding pattern, while 30% said they were taking on less risk. Just 14% said they plan to move into more risky asset classes.

“In a tough investment environment, it's no surprise that investors have sought out the apparent safety of cash — as it seems to offer the comfort of knowing that, for a while at least, their money isn't going anywhere,” Frank Porcelli, head of BlackRock's retail business, said in a statement. “But investors are faced with a new reality that sitting in cash could actually produce a negative return when factoring in inflation.”

One area where investors are still showing interest in is dividend-paying equities. Nearly a quarter of the investors surveyed plan to increase their allocation to those stocks over the next six months.

It isn't the election that's keeping investors from moving back into the market. More than 40% of the respondents said that the election outcome will have no impact on the market or that they're not sure if it will have an impact. Half of the investors said they will stay in a holding pattern if Romney wins, while 58% said they would do so if Obama is victorious.

Instead, the two biggest factors holding investors back are the fiscal cliff and uncertainty over how to change their asset allocation.

Among those investors who are holding cash and don't plan to make any new investments over the next 12 months, almost half said the biggest thing that could change their mind would be "credible action by government leadership to address our fiscal problems,” according to BlackRock.

Investors also were unsure whether or not to change their allocations to exchange-traded funds, alternatives and emerging markets.

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