HNWIs hold portfolios steady but ready to pivot if market worsens

Wealthy investors are concerned about inflation and the global economy and will change direction if conditions demand it

HNWIs hold portfolios steady but ready to pivot if market worsens
Steve Randall

Being super-wealthy doesn’t guarantee a free pass when economic conditions worsen, especially for those whose assets are susceptible.

A new survey of high-net-worth individuals (HNWIs) from 14 countries globally shows that, as with the rest of us, investors with US$1 million or more of investible assets along with business owners ($1m+ annual revenue), are concerned about inflation and energy prices.

The quarterly Investor Sentiment survey from UBS reveals that 9 in 10 respondents believe the war in Ukraine will worsen inflation and more than half say inflation will remain for more than 12 months.

Around half of respondents said that market volatility is higher than normal, and two thirds are expecting higher energy prices. Six in 10 expect more global instability and a similar share expects increased cyber-attacks.

Portfolio pivot?

The cohort is also concerned about market volatility but does not believe now is the time to reposition portfolios.

However, if necessary, they will change direction and consider buying gold, domestic stocks, and oil. Technology and energy remain the most attractive sectors in the current market environment.

“Investors globally are clearly concerned about the personal and economic impacts of one of the largest humanitarian crises in decades,” said Iqbal Khan, co-president of UBS Global Wealth Management. “The long-term economic implications of the war in Ukraine are difficult to assess, but most investors remain optimistic on their outlook for the stock market and are confident in their well-diversified investment portfolio.”

How’s business?

Among the business owner segment of respondents, the top concerns include geopolitical instability, rising material costs, tax increases, heightened regulations, and supply chain issues. 

This group is easing back on hiring and investing while focusing on employee benefits, upgrading talent, and IT spending.

“The impact of the war in Ukraine and rising inflation have forced business owners to again adapt to an unprecedented and unpredictable situation, after managing the effects of the pandemic on their business,” said Tom Naratil, president of UBS Americas and co-president of UBS Global Wealth Management.