A biannual survey by CNBC has found that wealthy investors expect equities to be weaker in 2023 with better returns available from cash
Wealthy investors believe they will get better returns from their cash holdings than from putting it into equities for the rest of 2023.
The twice-yearly CNBC Millionaires Survey polled 764 people with at least US$1 million in investable assets, who were either the sole or joint financial decision maker within the household.
More than one third of respondents said that they were keeping more of their wealth in cash – 24% of their portfolio up from 14% a year ago.
Fixed-income assets are also more in demand with 28% of poll participants having added to these holdings on expectation that interest rates will remain high.
The Bank of Canada increased rates to 4.75% on June 7 with a further hike anticipated at its July meeting. The Fed is being closely watched for signs of its next move, with its decision due June 14.
Equity markets
CNBC’s survey shows that wealthy investors in the US are not certain about the direction of travel for equities.
Around 4 in 10 think the market will end 2023 higher, with a similar share expecting it to be lower.
Despite the higher levels of cash holdings, the stats reveal that sentiment on equities has improved from a year ago when 69% were expecting the year to end lower and just 22% believed it would end higher.
“They’re becoming more comfortable with the market volatility and the fact that markets keep going up despite all the reasons it should be going down,” said George Walper, president of Spectrem Group, which conducts the Millionaire Survey with CNBC. “A lot of people are just confused as opposed to predicting further declines.”
However, sentiment on the US economy is less buoyant with 60% expecting it to worsen over the remaining months of the year.
Investors are also not confident that inflation will be brought under control anytime soon with more than half expecting it to take at least two years for the Fed to bring inflation down to 2%. More than 1 in 10 expect it to take five years.
