UBS Survey: Only 10-15% of investors put their cash to work during market pullback

Environment in Washington, national debt and health-care costs seen as top threats to financial well-being by wealthy investors.
FEB 20, 2018

Only about 10% to 15% of investors took advantage of the recent market pullback to boost their equity allocations or put cash to work, according to UBS Group AG. "We believe that this bull-market correction provides an opportunity," Michael Ryan, Americas chief investment officer, and Justin Waring, Americas investment strategist, wrote in a report discussing a UBS survey of more than 1,000 high-net-worth individuals and business owners. The survey was taken the week of Feb. 5, in the middle of the market meltdown. "For investors that have been on the sidelines waiting for a market pullback to find a better entry point, this is a good opportunity for accelerating dollar-cost averaging programs," they said. Of the high-net-worth investors, 68 % believe now is a good time to buy equities, though 80% are keeping their cash holdings unchanged, according to the report dated Feb. 14. And 80% think markets are entering a period of higher volatility, though 84% say the dip was temporary and not indicative of a recession.

Some Bullishness

One place where there was a notable move: bullishness about stock-market returns in the next six months, which dropped to 43% in February from January's 74%. Optimism about the economic outlook took a hit, too, falling to 58% from January's 72%. Still, 86% of the high-net-worth investors believe economic fundamentals are strong. The top three threats to financial well-being seen by the high-net-worth investors were the political environment in Washington (64%), the size of the national debt (58%) and rising health-care costs (51%). Like wealthy investors, business owners still retain some bullishness — with 74% saying the market dip is temporary, 62% asserting now is a good time to buy equities, and 76% responding that economic fundamentals are strong. However, their confidence is down — optimism about business prospects in the coming year dropped to 66% from 87% in January. Business owners are also tempering their actions, both in terms of expansion and contraction. In questions about planned actions, "increase hiring" fell to 24% in February from 36% in January, and "invest more in my business" halved to 22% from 44% in the prior month. Expected downsizing of the workforce also dropped, to 6% from 14%.

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