Wealthy Investors Favor Tech, Morgan Stanley Survey Says

Wealthy investors remain bullish on the investing environment in 2014 and see the U.S. as the best place to put their money, according to a survey released today by Morgan Stanley. (MS)

Technology was the most popular industry, with 72 percent of respondents declaring it a good area to invest, New York-based Morgan Stanley said in a statement. Investors expect to end 2014 with 42 percent of their portfolio in stocks and 23 percent in cash, according to the survey.

The Standard & Poor’s 500 Index has fallen 3.4 percent this year, including declines in four of the past five days, after jumping 30 percent in 2013. The Federal Reserve is reducing stimulus efforts, while many emerging-market central banks are raising interest rates to stem a rout in their currencies.

“When you have short-term volatility come into the market, you don’t want to overreact to that, you want to stick to your medium-term plan,” Greg Fleming, president of Morgan Stanley Wealth Management, said in a Bloomberg Television interview with Erik Schatzker and Stephanie Ruhle. “Over the medium-term, the key for the U.S. equity market is what happens to the U.S. economy.”

Morgan Stanley’s brokerage division, which the firm bought full control of last year, has 4 million customers and $1.91 trillion in client assets. Higher equity prices and a growing deposit base prompted the company to boost its targets for the unit’s profit margin earlier this month.

Investment Choices

More than half the respondents said the U.S. would be a good place to invest in 2014, followed by China with 41 percent, according to the survey. Sixty-seven percent said the Middle East is a bad area to invest.

Still, 90 percent of those surveyed said they are somewhat or very concerned about the U.S. economy. Eighty-two percent are concerned about increased foreign conflicts, according to the statement.

Economists estimate the U.S. economy grew at an annualized 3.2 percent in the fourth quarter, and initial figures are set to be released tomorrow. While the Fed’s tapering of its monthly bond-buying program is a “big risk and a unique risk,” recent volatility in stocks isn’t unusual, Fleming said.

“These are blips that do occur,” he said. “People forget, you go through a fourth quarter where the S&P was up almost 10 percent in one quarter, and it was almost in a straight-line basis. This is more typically what you’re going to see. You have to separate that from the medium-term.”

Morgan Stanley’s survey was conducted from October to December and interviewed 1,004 U.S. investors with more than $100,000 of investable financial assets.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editor responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net

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