Few Wealthy Investors Deployed Cash in Meltdown, UBS Survey Says

(Bloomberg) -- Only about 10 percent to 15 percent of investors took advantage of the recent market pullback to boost their equity allocations or put cash to work, according to UBS Group AG.

“We believe that this bull-market correction provides an opportunity,” Michael Ryan, Americas chief investment officer, and Justin Waring, Americas investment strategist, wrote in a report discussing a UBS survey of more than 1,000 high-net-worth individuals and business owners. The survey was taken the week of Feb. 5, in the middle of the market meltdown.

“For investors that have been on the sidelines waiting for a market pullback to find a better entry point, this is a good opportunity for accelerating dollar-cost averaging programs,” they said.

Of the high-net-worth investors, 68 percent believe now is a good time to buy equities, though 80 percent are keeping their cash holdings unchanged, according to the report dated Feb. 14. And 80 percent think markets are entering a period of higher volatility, though 84 percent say the dip was temporary and not indicative of a recession.

Some Bullishness

One place where there was a notable move: bullishness about stock-market returns in the next six months, which dropped to 43 percent in February from January’s 74 percent. Optimism about the economic outlook took a hit, too, falling to 58 percent from January’s 72 percent. Still, 86 percent of the high-net-worth investors believe economic fundamentals are strong.

The top three threats to financial well-being seen by the high-net-worth investors were the political environment in Washington (64 percent), the size of the national debt (58 percent) and rising health-care costs (51 percent).

Like wealthy investors, business owners still retain some bullishness -- with 74 percent saying the market dip is temporary, 62 percent asserting now is a good time to buy equities, and 76 percent responding that economic fundamentals are strong.

However, their confidence is down -- optimism about business prospects in the coming year dropped to 66 percent from 87 percent in January.

Business owners are also tempering their actions, both in terms of expansion and contraction. In questions about planned actions, “increase hiring” fell to 24 percent in February from 36 percent in January, and “invest more in my business” halved to 22 percent from 44 percent in the prior month. Expected downsizing of the workforce also dropped, to 6 percent from 14 percent.

To contact the reporter on this story: Joanna Ossinger in New York at jossinger@bloomberg.net.

To contact the editors responsible for this story: Tracy Alloway at talloway@bloomberg.net, Kenneth Pringle, Vince Golle

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