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NEW YORK - Wealthy Americans are more optimistic about the stock market now than they were last year, but they also believe gains will be more muted in the future, according to a survey released Tuesday. Continue below.
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The 2006 U.S. Trust survey of affluent Americans, the 25th in a series begun by the New York-based wealth management company in 1993, measures the confidence of a sample of the top 1 percent wealthiest Americans - those with an adjusted gross income of more than $300,000 or a net worth greater than $5.9 million.
The study found that 63 percent of respondents were optimistic about their U.S. stock market investments, up from 48 percent in 2005 but still below the 2004 high of 66 percent.
Still, the wealthy are concerned about future returns, the study found.
Asked to identify their top financial worries, the respondents expressed concern that stock market gains will be lower in the future. They also worried that their children will have a tougher time financially, terrorism could hurt the economy and inflation could eat away at investments.
"After a brief period of uncharacteristic pessimism, affluent investors have returned to their traditional belief in a strong U.S. economy and a healthy U.S. stock market," Paul K. Napoli, U.S. Trust vice chairman, said in a statement accompanying the report.
"At the same time, the affluent seem to realize that stock market gains are unlikely to replicate the inflated levels of the bull market at the end of the last decade," he said. Napoli said he expected stock market gains "will be reasonable, but not sensational" in coming years.
The study also found that the wealthy have shifted their portfolio holdings slightly from a year ago.
In 2006, the wealthy had 21 percent of their investments in domestic blue chip stocks, down from 24 percent in 2005, and had 15 percent in cash equivalents, down from 17 percent a year earlier. But they increased their holdings of international stocks to 7 percent from 5 percent and their investments in corporate bonds to 6 percent from 5 percent.
Other holdings included small-cap stocks, municipal bonds, U.S. government securities, real estate, venture capital and hedge funds.
Although the wealthy continued to hold an average of 15 percent of their portfolios in real estate, they are not as optimistic about future gains in this category than in the past.
Some 48 percent of the 2006 respondents think real estate values will increase over the next year, down from 72 percent who felt this way in 2005, the study found.
The study involved in-depth telephone interviews with 150 randomly selected wealthy Americans, with results accurate to plus or minus 7 percent.
U.S. Trust is a subsidiary of The Charles Schwab Corp., which is based in San Francisco.
By EILEEN ALT POWELL, AP Business Writer, June 06, 2006
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