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Wealth Management Trends

AMG Funds Survey Finds Investors Confident in Economy

New Survey Explores Investment Preferences and Generational Differences

Nearly two thirds of wealthy investors now feel optimistic about the economy, according to a new survey from AMG Funds.

Titled “Wealth Management Trends in America,” the survey polled 1,000 individual investors with investable assets of more than $250,000, and found that among that group, 60% feel good about where the economy is heading.

These investors also foresee fundamental changes in the economy, with the majority of respondents expecting a rise in interest rates (76%) and the rate of inflation (61%).

[Editor’s Note: Interested in further insights on the American investor? Consider “Survey Says: Investing in Real Estate is the Popular Choice Among Americans.”]

AMG Funds Survey: The Highlights

Here are the main market outlook highlights from AMG’s survey:

  • Investors are bullish on international equity markets, with 51% expecting them to go up (compared to 39% in 2016).
  • Similarly, investors are confident in the U.S. stock market, with 69% expecting it to rise (up from 64% in 2016).
  • Real estate is also cause for optimism, as 67% of investors expect prices to rise.

William Finnegan, the chief marketing officer of AMG Funds, stated that investor confidence has paired with a disconnect in market sentiment.

“Affluent investors are more confident and optimistic than they have been for several years,” Finnegan stated. “At the same time, as expectations and markets continue to evolve, we’ve begun to see a disconnect between investors’ market sentiment and their portfolio positioning. We encourage investors to match their asset allocation decisions with market expectations and long-term investing goals.”

Active Investments vs. Passive Investments

AMG specifically asked investors about their thoughts on active and passive investments:

  • There is support among investors for passive investments. While 70% believe passive investments are a safe bet, 37% believe they outperform actively managed investments; furthermore, 56% believe that passive investments “almost always” provide greater diversification than actively managed funds.
  • In terms of diversification, 52% of investors believe that adequate diversity comes from owning a broad range of stocks.
  • Overall, though, more investors allocated to active than passive investments, 56% compared to 42%.

[Editor’s Note: For much greater insight into passive investments, tune in to our upcoming webinar “The Basics of Fund Formation.”]

Generational Differences with Investing

AMG Funds also surveyed specific generations on their investment strategies, and the results were fascinating:

  • Although millennials consider themselves to be aggressive investors, they allocate nearly one quarter (24%) of their investments to cash, which is the least aggressive asset class.
  • Moreover, 63% of millennials consider themselves “very knowledgeable,” but only 10 percent can correctly define risk.
  • Among Generation X, 31% are counting on inheritance to help fund future needs, but 44% worry they will not have enough to retire.
  • Some 49% of Gen Xers report that they need financial advice “now more than ever,” and almost all of those, 46, are willing to pay more for oversight of their investments.
  • Baby boomers were both the most cautious and modest of the generations: while 46% think it best to ride out a market downturn, only 25% feel “very knowledgeable” about investing.

The AMG Funds survey of nearly 1,000 affluent investors was conducted online among those with more than $250,000 in household investable assets, who participate in making household savings and investment decisions. Data was collected between December 14 and 22, 2017, among respondents aged 18 or older through an online consumer panel.

 

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About Mike Brady

President of Generosity Wealth Management.

View all articles by Mike »

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