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Wealthy investors brace for market sell-off, higher volatility - UBS

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Wealthy investors brace for market sell-off, higher volatility — UBS

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(Kitco News) World’s wealthiest investors are bracing for a market sell-off and increased volatility in 2020, according to UBS Global Wealth Management.

“High net worth individuals globally have a guarded outlook for next year,” UBS said in its Investor Watch survey, which polled more than 3,400 investors with a minimum net worth of USD $1 million across 13 markets between August and October.

Majority of those polled said that see much higher volatility and a potential market sell-off next year, UBS reported. Wealthy investors said they hold 25% of their portfolios in cash, which is higher than the investment bank recommends.

“Seventy-nine percent of respondents said markets are moving towards a period of higher volatility. Seventy-two percent characterized the investment environment as more challenging than five years ago,” the survey said. “Overall, wealthy investors still hold 25% of their portfolios in cash, far higher than UBS’s recommendations, with 60% saying they would consider increasing that level further.”

The biggest issues clouding investors’ outlook in 2020 include the U.S.-China trade war and the U.S. presidential election.

“The US-China trade conflict attracted the most concern, on 44% of respondents, with domestic politics on 41% and the US election in 2020 on 37%,” UBS wrote.

Geopolitical tensions are definitely at the forefront for majority of those polled, said UBS Global Wealth Management client strategy officer Paula Polito.

“The rapidly changing geopolitical environment is the biggest concern for investors around the world. They see global interconnectivity and reverberations of change impacting their portfolios more than traditional business fundamentals, a marked change from the past,” Polito said.

Looking at the decade ahead, wealthy investors seem to be much more optimistic long-term as they want to align their portfolios with some mega-trends.

“Sixty-nine percent of respondents said they were still optimistic on investment returns over the decade ahead. Eighty-eight percent expressed interest in aligning their portfolios with anticipated investment mega-trends - in line with UBS’s thematic Longer-Term Investment offering. The aging population was most often identified as a mega-trend, by 87% of respondents,” the survey said.

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