Investor optimism isn’t necessarily spilling over into account allocations.
According to research recently released by AMG Funds, investors have remained consistently conservative in their investment approach despite being optimistic about the prospects of the global economy.
Nearly two-thirds (64 percent) of the respondents expect U.S. stocks to rise. Expectations were consistent across demographic groups, according to AMG funds.
Yet there were more respondents (30 percent) focused on capital preservation than there were investors focused on maximizing returns (19 percent). Despite the improving market conditions, investors were more conservative in the most recent iteration of the survey than they were last year, according to AMG funds.
Investors were less bullish on international equities, where 39 percent of the respondents expected valuations to rise. Millennials, aged 18 to 35, were more bullish than other age groups, with 73 percent of millennial respondents expecting international stocks to rise.
Yet millennials continue to be more conservative than their elders, with millennial respondents reporting the lowest allocations to equities among all age groups, at 30 percent. The average equity allocation for all respondents was still conservative, at 45 percent.
While most respondents reported holding a “long-term outlook,” more than half defined “long-term” as a period of fewer than five years. The majority of millennial respondents defined “long-term” as shorter than three years.
The respondents believe that inflation and interest rates will the rise going forward – 77 percent believe that interest rates will increase, while 65 percent anticipate that inflation will rise over the next 12 months.
Nevertheless, just 32 percent of the respondents expected higher market volatility in 2017.
For its research, AMG Funds late last year sponsored an online survey of more than 1,000 individual investors with more than $250,000 in net worth.