Investors are concerned but looking to add stocks and reduce cash
Investor optimism took a 7% dip since last quarter, with US investors expressing concerns about inflation, and for good reason. In December, US consumer prices climbed at their fastest pace since 1982, up 7% from the year before.
Another key concern for US investors is market volatility, which increased in the fall of 2021 due to rising concern about the Omicron variant. Risk assets fell when news of the fast-spreading variant broke and continued into January as geopolitical tensions increased. Almost half (48%) of investors are now worried about a market downturn, according to the survey. Other major concerns investors have include politics, the national debt, tax increases, and cyber security.
In light of these issues, investors are interested in looking at their portfolios to see where changes can be made. In particular, they interested in adding stocks, portfolio hedges, and real estate. They also want to put their cash to work. 61% say more than 10% of their portfolios are in cash or cash equivalents. Of them, 56% are concerned about the impact of inflation on the value of that cash.
Investors also reported that they’re considering borrowing ahead of rate increases that are coming soon in the US. 42% say they’re likely to refinance an existing mortgage, 41% say they’re likely to borrow against investments, and 41% say they’re likely to apply for a new mortgage.
Investors’ political priorities
Politics are top of mind for investors as Democrats attempt to pass a scaled-down Build Back Better bill and market volatility persists due to rising tensions at the Russia-Ukraine border. Investors, looking ahead to the mid-term elections, say they want the Biden Administration to prioritize controlling inflation (82%), the COVID-19 pandemic (81%), unifying the country (78%), and managing US relationships with China (75%) and Russia (74%).
Business owners are optimistic and plan to hire
US business owners remain optimistic, despite a slight dip in plans to invest in their businesses and increase their workforces. 78% are optimistic about their own business, and are planning to hire (41%) and invest in that business (49%). While these numbers took a slight downturn since the previous survey, they continue to be strong.
Many of the top concerns weighing on the minds of business owners are rooted in recent inflation: supply chain issues (66%), rising material costs (64%), business tax increases (63%), wage inflation (62%), and increasing regulations (60%).
Many owners are considering an exit within the next few years and may seek guidance on the best way to do that. 42% say they plan to sell or pass on their business in the next five years, and 31% say they plan to do so in more than 6 years.
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View the infographic to explore more findings from the UBS Investor Sentiment US 4Q 2021 survey, 8 February 2022.
Main contributor: Kerry Breen
About the survey: UBS surveyed 900 investors and 500 business owners in the US with at least $1M in investable assets (for investors) or at least $1M in annual revenue and at least one employee other than themselves (for business owners), from January 11 – 24, 2022. For the 3Q21 results, UBS surveyed 900 investors and 500 business owners in the US, from September 28 – October 18, 2021.
This article is for informational and educational purposes only and should not be relied upon as investment advice or the basis for making any investment decisions. The views and opinions expressed may not be those of UBS Financial Services Inc. UBS Financial Services Inc. does not verify and does not guarantee the accuracy or completeness of the information presented.
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Review code: IS2200669
