A prolonged low-interest-rate environment has compelled high-net-worth investors to seek out dividend-producing stocks and corporate bonds with renewed vigor, according to a new survey by Fidelity Investments.
More than 1,200 investors holding at least $250,000 in investable assets were asked a variety of investment strategy and product preference questions in the “Fidelity Viewpoints Forum” survey conducted last week.
“This group of high-net-worth investors are realists about this low-interest rate environment, but are not resigned to accepting low returns,” John Sweeney, executive vice president of Fidelity Planning and Advisory Services, said in the report. “They’re willing to look to alternative products to find yield, but we encourage them not to stretch too far and lose sight of their underlying investment strategy and encounter unnecessary risk.”
Forty-four percent of respondents said they would put their next investing dollar in U.S. stocks, 16% would put it in investment-grade corporate bonds, 9% preferred high-yield bonds and 9% opted for “under the mattress.”
Among other findings from the survey:
-- 54% of investors are most bullish about dividend-producing stocks.
-- 28% of respondents say the ongoing Eurozone crisis was their “most pressing” financial worry, followed by U.S. debt problems (27%) and high unemployment/recession (24%).
-- Only 18% of high-net-worth investors think they can top the 7% return delivered by fixed-income investments in the past year. And 32% said they think their fixed-income returns will drop below 4% in the coming year.
-- 86% of high-net-worth investors believe their tax obligation will be higher next year, both on income and on investment income including capital gains and dividends, yet 52% said they don’t plan to employ a new tax strategy to manage this expected increase.
Fidelity said the poll was conducted June 13 via a webcast interface provided by On24 during the firm’s live “Fidelity Viewpoints Forum: Investing for Income” in Boston where five portfolio managers weighed in on a variety of macroeconomic and investment issues.
Larry Barrett writes for Financial Planning.
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