Millionaires in America are flocking to invest in the stock market after years away – but which sectors are attracting the most interest?
A survey suggests the wealthy still prefer technology and health for investment, but they are also increasingly attracted to real estate and financial services.
The survey revealed that more than half of millionaire respondents – 56% – are looking to invest in equities in 2013, which is up from 45% last year.
The increased confidence being shown by millionaires in equities is reflected by the improving job market, modest economic growth and signs that the property market may be about to pick up again.
Technology and healthcare both rank as number one in preference for investments by millionaires, though it’s a slight drop in choice for technology shares since 2010 while healthcare has jumped from third spot two years ago to the top place.
Real estate attraction
In third place is pharmaceuticals, which has also seen a drop in preference since 2010, and a rise in interest has seen communications stocks rise slightly.
However, it’s in real estate that has seen interest double in two years, with 24% of millionaires saying they are likely to invest in this sector, up from 13% two years ago.
Next in choice is the financial services sector and then construction, which both saw slight increases.
Sectors which became less attractive for millionaires to invest in were manufacturing, transport and the automotive industries.
The website Millionaire Corner has also revealed that while people with a high net worth are more likely to own stocks in companies they also allocate a significant portion of their asset portfolio to stock mutual funds.
When asked, three-quarters of wealthy investors with a personal worth of between £3 million and £15.5 million said they had invested an average of £505,000 in mutual fund stocks, despite the funds charging management fees and tax charges which diminish profits.
However these investors confess that the mutual stocks meet two important criteria for their investment strategy – they can manage the risk and help diversify their holdings.
That’s because mutual stocks pool cash from investors to create a portfolio of equities, while spreading the risk for greater diversification than if the investor was to act alone.
Mutual funds also have high levels of liquidity and can redeem an investor’s shares easily.
However, the survey also revealed that many wealthy investors are also planning to invest more cash – slightly more than were planning on investing in equities this year.
Another growing trend is investing in commodities, like precious metals.