So, how bad is it out there?
Despite global recession fears, dysfunctional governments and the prolonged trade war, investors still expect higher stock-market returns over the next six months, according to the most recent investor sentiment survey from UBS, released Friday.
Even so, more investors are getting defensive, reflected in bigger cash holdings. “Geopolitical concerns such as the global trade war are keeping investor optimism in check,” said Paula Polito, client strategy officer at UBS Global Wealth Management.
Large cash balances signal a “wait-and-see mode,” she said.
There is strikingly little consensus on what the not-so-distant future will hold. Investors think interest rates will go up—unless they go down, or don’t change at all.
Polito called this backdrop a “dichotomy.” Also bifurcated: some of the sentiments held by American respondents compared with those of global investors. The survey reflects responses from nearly 5,000 investors with the equivalent of at least $1 million in investible assets across 18 countries.
Check out these four key charts that best illustrate how those investors are thinking about the near-term investment landscape:
Global investors are more sanguine about the world economy than U.S. respondents.
Optimism about global economy
…but U.S. investors expect higher returns for stocks than investors outside its borders.
Expected stock returns
U.S. investors acknowledge the importance of interest rates on investing decisions, but have no idea where rates will end up in the near term.
Interest rate trajectory
About 34% of investors are increasing their cash stockpiles in favor of finding new investments
Cash allocations tick up