Few wealthy investors deployed cash in meltdown, UBS Survey says

Of the high-net-worth investors, 68% believe now is a good time to buy equities, though 80% are keeping their cash holdings unchanged

Only about 10 per cent to 15 per cent 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 per cent believe now is a good time to buy equities, though 80 per cent are keeping their cash holdings unchanged, according to the report dated Feb. 14. And 80 per cent think markets are entering a period of higher volatility, though 84 per cent 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 per cent in February from January’s 74 per cent. Optimism about the economic outlook took a hit, too, falling to 58 per cent from January’s 72 per cent. Still, 86 per cent 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 per cent), the size of the national debt (58 per cent) and rising health-care costs (51 per cent).
 

Like wealthy investors, business owners still retain some bullishness -- with 74 per cent saying the market dip is temporary, 62 per cent asserting now is a good time to buy equities, and 76 per cent responding that economic fundamentals are strong.

However, their confidence is down -- optimism about business prospects in the coming year dropped to 66 per cent from 87 per cent 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 per cent in February from 36 per cent in January, and “invest more in my business” halved to 22 per cent from 44 per cent in the prior month. Expected downsizing of the workforce also dropped, to 6 per cent from 14 per cent.