Wealthy people around the globe are hunkering down for a potentially turbulent 2020.
A majority of rich investors expect a significant drop in markets before the end of next year, and 25% of their average assets are currently in cash, according to a survey of more than 3,400 global respondents. The U.S.-China trade conflict is their top geopolitical concern, while the upcoming American presidential election is seen as another significant threat to portfolios.
“The rapidly changing geopolitical environment is the biggest concern for investors around the world,” said Paula Polito, client strategy officer at UBS GWM, in a statement. “They see global inter-connectivity and reverberations of change impacting their portfolios more than traditional business fundamentals, a marked change from the past.”
Nearly four-fifths of respondents say volatility is likely to increase, and 55% think there will be a significant market sell-off before the end of 2020, according to the report which was conducted between August and October and polled those with at least $1 million in investable assets. Sixty percent are considering increasing their cash levels further, while 62% plan to increase diversification across asset classes.
In the same survey in May, an even higher amount — 32% — of investor portfolios was in cash.
“The challenge is that they seem to want to respond” to short-term uncertainty “by really shortening their time horizons and shifting to assets like cash that are safe,” said Michael Crook, a managing director on the investment strategy team. Though with many of these people investing on a time horizon across decades and for future generations, that “seems like a mismatch.”
The reality is that Volatility cycles in the markets as you see in the chart above. We are currently at a low point which points to rising volatility. But does that mean a correction?
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InterAnalyst has been serving over 500,000 investors globally since 1990. Authoring hundreds of financial articles, publications, and almost a million buy and sell trading charts. Mr. Nespoli’s Premier Bull & Bear blog is been read by more than 500,000 investors globally.