Nearly a third of investors are eyeing allocation changes, with pre-IPO demand hitting new highs
A growing share of investors say they are open to changing how their money is allocated even as broader market sentiment improves.
According to Morgan Stanley Wealth Management's latest quarterly pulse survey, 33% of investors are weighing changes to their portfolio allocations over the next six months, an increase of eight percentage points from the prior quarter. That marks one of the more notable shifts in the data, suggesting clients are less inclined to sit still even as confidence in the broader market grows.
Demand for exposure to companies ahead of their public listings also jumped sharply, with 75% of investors saying their interest in private markets has increased over the past six months, a trend that could shape conversations between advisors and clients looking to diversify beyond public equities.
Chris Larkin, managing director and head of trading and investing at E*TRADE from Morgan Stanley, tied the shift to a market that is no longer leaning so heavily on a handful of technology names.
"Morgan Stanley's Global Investment Office has noted the market is showing signs of broadening beyond its narrow tech base, which means investors are looking far and wide for new investing opportunities," Larkin said. "So they're not standing still. Despite persistent inflation concerns, investors remain open to shifts in market leadership and are increasingly looking beyond traditional markets."
Sector picks
Technology remained the sector investors see as offering the most potential this quarter, with 57% naming it their top pick, essentially unchanged from the previous quarter and still driven largely by enthusiasm for artificial intelligence.
Energy slipped to second place at 43%, down from 49% last quarter, a decline the survey attributes to geopolitical uncertainty weighing on the sector. Health care held steady in third at 34%, down a single point, which the survey suggests may reflect investors gravitating toward areas that have historically held up better during volatile stretches.
Overall bullishness climbed to 62% this quarter from 56% in the second quarter, and 66% of investors now expect the market to finish the quarter higher, up from 55% previously.
Concerns about volatility eased only slightly, with 61% of investors still expecting it to increase this quarter compared with 63% last quarter.
Inflation remains the top financial worry cited by investors, rising to 52% from 50% last quarter. Energy costs climbed to 22% from 18%, putting it level with market volatility as the second-highest concern.
