Fidelity surveyed customers with at
least $250,000 in investable assets on a range of topics including potential
tax increases, sector growth and opportunities in emerging markets.
Key findings of the poll include:
Just 46% of high-net-worth investors think that the market will
end the year higher than its current levels, and 30% believe it will be down
from current levels.
Despite market pessimism, these high-net-worth investors still
expect positive returns. In fact, when asked about their average long-term
annual return, investors say 6%, versus the annualized S&P 500 return of 1%
from the previous five years.
Only one-third (34%) of investors believe the current market rally
is sustainable. This lack of confidence in the current rally may be the reason
why 54% of investors are only partially invested or slowly re-entering the
The majority (56%) of high-net-worth investors believe that
politicians will postpone a decision on taxes and spending until after the 2013
presidential inauguration and when a new Congress in in place. Thirty percent
believe a modest short-term compromise will be achieved.
Potential income tax increases were the most concerning for
respondents (35%), with capital gains tax increases second (27%). Half of respondents said there are important steps they
could take in anticipation of tax increases. The top three steps include
converting retirement assets to a Roth IRA (12%), accelerating income into 2012
(12%) and deferring losses or deductions into 2013 (10%).
Forty-five percent of high-net-worth investors believe
that large-cap equities offer the greatest potential upside over the next 12
months. This is followed by mid-cap equities (29%) and small-cap equities (26%).
For the next 12 months, investors’ top choice (22%)
for earnings potential is the energy sector. Information technology and health
care are tied for the second spot at 19%.
“Successful investors keep their eyes focused on their
long-term goals, in spite of short-term turmoil,” said John Sweeney, executive
vice president of Fidelity Planning and Advisory Services. “By cutting through
the day-to-day noise, managing risk and looking for long-term opportunities,
our high-net-worth investors are exhibiting just that kind of mindset.”
The Fidelity Investing for Income Poll was conducted September 6
via a webcast interface provided by On24. On average, 1,574 attendees responded
to each question, and the majority have investable assets
in excess of $250,000.