High net worth investors want to buy or hold stocks during downturns, survey finds

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, United States, May 3, 2022.

Brendan Mcdermid | Reuters

High net worth investors are more likely to increase their stock holdings or exit certain sectors rather than sell if stocks continue to fall, according to a new survey.

More than one in four, or 26%, of US millionaire investors surveyed said they would increase their investments if financial markets continued to fall, according to the UBS Investor Sentiment survey. Only 19% said they would reduce their investments and 25% said they would make no change.

The survey, of 900 investors and 500 business owners with at least $1 million in investable assets, found that 30% of investors said they would switch sectors if markets go down. When asked how likely they would be to invest in certain asset classes, the largest number, 37%, said stocks. They also plan to invest more in commodities, with 32% favoring gold and 31% oil.

“I think this is another case of investors doing a good job of not overreacting,” said Jeff Scott, head of client knowledge at UBS Global Wealth Management. “That doesn’t mean they won’t make tactical changes. But they’re not selling because the market has gone down. We encourage people to have a financial plan and stick to it.”

Admittedly, the investor survey was conducted between April 5 and April 18, before the latest market declines. Still, wealthy investors don’t seem to be filling up the cash. Average holdings of cash and cash equivalents actually fell slightly to 19% of investable assets, down from 20% in February’s Investor Sentiment.

Those who hold a large amount of cash worry about the effects of inflation. Of those who hold more than 10% of their assets in cash, two-thirds are “very concerned about the impact of inflation on the real value of their money”, according to the survey.

A majority of investors cite inflation as their top investment concern, second only to politics and geopolitical risk. A majority, 51%, also said volatility was higher than usual, with the S&P down 13% so far this year and the Nasdaq down 21%.

As the market wobbles, worries about rate hikes and inflation take center stage, Scott said wealthy investors are finding some comfort in the receding fears over Covid-19.

“The pandemic isn’t over, but there seems to be a greater sense of a return to normal,” he said. “At least in the United States, this somewhat offsets growing concerns about Russia, Ukraine and inflation.”

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