Wealth Management Trends in America, AMG Funds’ annual investor survey, suggests investors should re-evaluate their investing decisions to align with positive shifts in market sentiment
GREENWICH, Conn., March 02, 2017 (GLOBE NEWSWIRE) -- While investors have become increasingly optimistic regarding the forward prospects of the global economy, they have remained consistently conservative in their investment approach, according to a survey conducted at the end of 2016 by AMG Funds LLC, the U.S. retail distribution arm of global asset management company Affiliated Managers Group, Inc. (NYSE:AMG). The survey polled approximately 1,000 individual investors with over $250,000 in household investable assets regarding their expectations about the macroeconomic environment, as well as their mindset and behaviors around investing.
With 58% of surveyed investors expecting improvement in economic conditions over the next 12 months, compared with 43% who held that view in the previous year, the survey found that investors are becoming increasingly confident in the outlook for the economy and financial markets. Positive sentiment among investors increased by slightly more than one-third (35%), against a 44% decline in bearish views. This improvement in investor attitude was consistent across age groups, although Millennials were the most upbeat, with more than three-quarters (77%) expecting the economy to improve in the next 12 months.
The survey revealed that investors have increasingly positive expectations for financial markets and the economy over the next 12 months, including:
- Rising Domestic Equities: Nearly two-thirds (64%) of investors expect U.S. stocks to rise, compared with 47% of investors with this expectation in the previous year. Expectations were largely consistent across demographic groups
- Rising International Equities: 39% of investors expect valuations of international stocks to increase, compared with 29% of investors in the previous year. Millennials stood out as the most bullish age group, with 73% of respondents expecting international stocks to rise
- Rising Inflation and Interest Rates: The majority of investors believe inflation and interest rates will increase (65% and 77% respectively). These expectations are heightened among those 71 years of age or older. A rising interest rate environment is typically associated with a strong economic environment
- Reduced Market Volatility: Only 32% of investors expect high to very high market volatility, fewer than the 41% with this expectation in the previous year
While investors expressed considerable bullishness, the survey also revealed that the positioning of their investment portfolios appears to remain conservative.
- Investment Goals: Survey results from late 2016 versus late 2015 indicate investors’ goals shifted toward conservatism, with a decline in the number of investors focused on maximizing growth and returns (19% vs. 22%) and a corresponding increase in the number prioritizing the preservation of principal and minimization of losses (30% vs. 28%)
- More Investors Have a Low Risk Tolerance: Nearly 40% of investors describe their risk tolerance as conservative while only 26% categorize themselves as aggressive. In fact, the average equity allocation for investors is 45% of the total portfolio, with Millennials’ allocations to equities the lowest of all age groups at only 30%
- Shorter Investment Horizon: 86% of investors claim to have a long-term outlook; however, more than half define “long-term” as describing a period of fewer than five years. Millennials have the shortest definition of “long-term,” with the majority of responses defining the term as describing a period of fewer than three years
“Investors’ forward-looking views on the economy seem to be misaligned with their current positioning within their investment portfolios,” notes Jeffrey T. Cerutti, CEO of AMG Funds. “Investors with a positive view of the economic environment may wish to consider re-evaluating their allocation strategy to ensure that their investment approach is aligned with their outlook, risk tolerance, and the time horizon of their goals.”
Methodology
The AMG Funds survey was conducted online among affluent investors with over $250,000 in household investable assets, who participate in making household savings and investment decisions. Data was collected from November 28, 2016, through December 7, 2016, among 1,000 respondents, age 18 or older, through an online consumer panel. Data for the baseline study was collected between September 10 and 16, 2015 among 980 respondents, age 18 or older, through an online consumer panel. The data was weighted by distribution of age and investable assets from the 2013 Survey of Consumer Finance. Percentages may not total to 100 due to rounding.
About AMG and AMG Funds
AMG is a global asset management company with equity investments in leading boutique investment management firms. Through AMG’s innovative partnership approach, each Affiliate’s management team retains ownership of significant equity in their firm while maintaining operational and investment autonomy. AMG Funds LLC is the U.S. retail distribution arm of AMG. AMG Funds provides access to premier boutique asset managers through a unique partnership wherein the investment managers remain truly independent. AMG Funds is not beholden to a single investment approach or a single manager in delivering quality investment solutions. This innovative approach leverages the independent manager’s specific expertise to deliver products that cover the complete asset class spectrum. AMG Funds offers unmatched access to specialized investment expertise by delivering the talents of independent management teams under a consolidated platform.
For more information on the results of AMG Funds’ research, please visit www.amgfunds.com/wealth-trends.
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