Wealthy US investors sitting on cash despite optimism in economy

UBS survey: Biggest worries were political environment, followed by national debt and health-care costs

May 7, 2019 @ 11:04 am

By Bloomberg News

A majority of wealthy American investors are optimistic about U.S. stocks, but are still sitting on piles of cash, according to a UBS Group survey.

A sunny outlook reigned among 57% of the survey's U.S. respondents. The survey, conducted in March, targeted investors with at least $1 million in investble assets. Tempering that enthusiasm were the 29% who described their outlook on U.S. equities as neutral, and 14% who said they were pessimistic.

(More:Financial advisers head to cash as stocks move up)

The percentage of optimists is roughly even with the reading for 2018's fourth quarter, which was taken in November before the stock market plunge. Back then, fewer investors described themselves as neutral and more said they were pessimistic.

A majority of U.S. investors also expressed optimism about the economy, at 56%. They were less sanguine on the global outlook — 37% said they were optimistic, 32% neutral and 31% pessimistic.

While 26% of U.S. investors said they plan to invest more in the next six months, they currently have an average of 23% in cash. Their biggest worries were the political environment, followed by the national debt and health-care costs.

Investors who reacted to December's market drop by moving into cash "are probably unhappy they gave up gains in the first quarter of this year," said Mark Sanborn, head of investment platforms and solutions for UBS wealth management in the Americas. "Our clients felt they lost time and energy in the first months of the year worrying, and want to be reinvested as quickly as possible."

The survey, which also sampled attitudes in 16 other world markets, found just over half of global investors optimistic about the world economic outlook, and 21% pessimistic. Cash makes up a big part of global portfolios, at 32%, and the highest proportions were in Asia and Latin America, at 36%, UBS said.

(More:10 predictions for financial advice in 2019)

The top concerns among global investors were "my country's politics" at 44% , and the national debt and cybersecurity, both cited by 40% of respondents.

A global trade war was the leading concern in Asia and the third most pressing investor worry in Europe, excluding Switzerland. Cybersecurity ranked second among risks weighing on the minds of European investors. Switzerland, where UBS is headquartered, was the only region to cite data privacy as a top-three concern.

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