Federated Investors Inc. has released its 2013 Investor Mindset Survey and the results reflect a growing preference for equities among in the high net worth bracket.
Twenty-four percent of the investors surveyed plan to invest more in equities over the next year, as compared with 10% for bonds. Linda Duessel, senior vice president, senior equity strategist and senior client portfolio manager of Federated, attributes the shift to the “long anticipated 'Great Rotation.'”
“High-net-worth investors appreciate that they can't just go with a bond strategy anymore,” she said. “The rotation comes from the realization that you can actually lose money in government bonds.”
More striking is the interaction between two seemingly contradictory results in the survey — economic and market outlooks.
Fifty-six percent of respondents expect the economy to improve over the next 12 months but even so, 34% of them expect lower returns over the same period. Just 24% expect higher returns.
Ms. Duessel explained the tension by pointing to the uniqueness of the current year to date. “We're up 16%,” she said. “It's been a ridiculous year.”
While the survey results point to an imminent “Great Rotation,” according to Ms. Duessel, Federated has viewed equities as a solid investment since the market plunged during the crisis.
“Since 2009, we've advocated a [secular] buy-and-hold bull market strategy,” she said.