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High Net Worth Investor Survey: Hope and Conviction
• Key Debate: Has the recent fall in equities dampened the spirit of high net worth investors towards equities?
• Market View: We surveyed 73 of Morgan Stanley's private wealth customers with the help of our private wealth management team.
• High net worth investors see about 19% upside to equities for 2011, slightly more than upside than what institutional investors anticipated
based on our survey of institutional investors (“Morgan Stanley Institutional Investor Survey: No Bulls in Sight" dated 20-Jan-2011). More than
90% of the investors surveyed are looking for positive returns in equities. The conviction levels on equities appear quite high.
• On the aggregate, the survey participants see range bound long bond yields again no different from institutional investors though just under a
third of them see bond yields rising from current levels.
• They consider corporate fundamentals and global markets as the most important driver of Indian equities followed by government policies. 37%
worry most about domestic inflation. A spike in oil prices and politics seem to be other concerns. HNIs see inflation and short term rates (policy
rates) heading higher in 2011.
• Stock picking seems to be dominant theme among investors, with around 2/3rd of investors voting for it as the best way to make money in
2011. A few are buying protection against volatility.
• The sector views is unusually dispersed. About a sixth of the investors like financials, healthcare, industrials and technology, i.e., there is no
clear sector winner in their eyes. On the flip side, 39% of the participants voted financials as likely to be the worst-performing sector in 2011,
followed by telecoms.
• Equities remains the biggest asset on HNI portfolios. Nearly 30% of the investors we surveyed have more than half their current portfolios in
equities. Real estate accounts for a 18% of HNI portfolios.
• Given this position, it is not surprising that HNI believe that Sensex will be best-performing asset class in 2011 followed by midcaps, gold
(which is currently 7% of portfolios) and crude oil. Government bonds is the least favored class, followed by real estate and cash. HNI have
around 13% of their portfolios in cash if our survey is used as evidence.
• Conclusion: The recent shake out in the equities market may have shaken HNIs but they seem to backing equities with a high level of conviction
based on our survey results.
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