In a world that is increasingly connected, the impact of geopolitical events—such as the global trade conflict, the upcoming US Presidential election, Brexit, political discord in multiple regions—is weighing on investors globally, causing the majority to feel uncertain. Business fundamentals such as profitability, revenue and growth potential that once were the backbone of how investors think about the market are now being usurped by a confusing geopolitical landscape. As a result, investors are now less likely to act.
But beyond 2020, looking toward the new decade, investors feel far more confident about the profound changes they see on the horizon.
Investors see reasons to be cautious in the new year. Almost 8 in10 investors feel markets are moving toward a period of higher volatility. More than half of investors expect a significant drop in the markets at some point in 2020. As a result, 52% are unsure if now is a good time to invest. Nearly three in four investors say the investment environment is more challenging than it was five years ago. The majority (58%) feel less in control of their portfolio’s performance than they used to.
To cope with this environment, 64% are considering adding high quality stocks to their portfolios, while others would increase diversification and raise cash. There is a clear connection between investor confidence and planning. Two-thirds of investors with a long-term plan in place are highly confident they will achieve their goals, compared to only 51% of investors without a plan.
Seven in 10 investors feel optimistic about their portfolio returns over the next decade. Investors have identified a number of “mega-trends” they see changing the world, most notably an aging population, increasing technology and diminishing natural resources. Investors expect the technology, healthcare and energy sectors to benefit the most from mega-trends in the decade ahead. A full 88% are interested in aligning their portfolios to these trends.