Optimism among individual investors in the US has risen sharply in the past year, driven by increasingly more positive outlooks among younger investors, signaling an end to the flight to cash and a return to investing in capital markets, according to a survey by UBS Investor Watch.
Some 35 percent of individual investors are optimistic about the economic outlook over the next 12 months, compared with 21 percent a year ago, according to the UBS survey of 2,023 individual investors in the US between August 16 and September 7. Among investors aged 49 and under, 45 percent say they are optimistic, while only a third of older investors state the same.
‘Having built up considerable cash holdings after the financial crisis, investors appear poised to increase investments after the election,’ according to the UBS conclusions. ‘In line with this improved outlook, an overwhelming nine in 10 investors feel they have enough or too much cash. High net worth investors in particular are more likely to move out of cash in the next year.’
The study, which included individuals with at least $250,000 in investable assets, while half of the respondents had more than $1 mn, also shows that the number of investors who describe themselves as ‘pessimistic’ about the next 12 months dropped to 38 percent from 60 percent over the past year. Twenty seven percent of investors say they feel neither pessimistic nor optimistic, an increase from 19 percent a year ago.
The number of affluent investors who say they are holding more cash than they need rose to 17 percent from 13 percent over the past year, while the number of investors who say they aren’t holding enough cash dropped to 16 percent from 19 percent, according to the survey.
Investors with more than $1 mn in savings to invest were more likely to say they have more cash and cash equivalent than they need, with the figure rising to 28 percent from 18 percent. The number of high net worth investors saying they should have more cash dropped to 7 percent from 11 percent.
The survey also queried individual investors about their concerns for the economy, and found that 61 percent of respondents are ‘very or extremely worried’ by the size of the US national debt. Fifty nine percent say the same about rising health care costs, while 56 percent cite extreme concerns about the upcoming US election.
