The results of a recent Investor Pulse Poll conducted by Morgan Stanley Wealth Management show that Denver-area high net worth (HNW) investors resoundingly declare the region’s housing market both overpriced and unaffordable to first-time home buyers. However, they are torn on whether Millennials should prioritize investing in a home above other financial goals.*
Morgan Stanley Wealth Management’s Investor Pulse Poll is a survey of more than 1,000 national and local HNW investors designed to measure the investment pulse nationally and in selected markets across the country.
Investors Critical of Rising College Costs
In Denver, college was another point of contention:
• 93% agree, and 55% strongly agree, that the sharp rises in cost are not justified
• 70% believe a college degree to be a “must” for students today
• 64% believe anyone who applies himself or herself can find the financial aid and scholarships needed to afford college
However, there is far less consensus on whether children should bear the responsibility of paying for their college tuition (51% agree) or whether a four-year college degree is worth paying for regardless of the price tag (47% agree).
Investing in the Future: Interest in Sustainable and Socially Responsible Investing
Six in 10 Denver-area HNW investors are at least somewhat familiar with socially responsible investing, with slightly less – 48% - considering themselves well-versed in sustainable investing.
Moreover, respondents overall are open to both concepts after being provided with brief descriptions. In particular, 68% are somewhat or very interested in sustainable investing, with 51% rating it as a “good” investment this year. Socially responsible investing is not far behind, with 62% expressing interest and 46% seeing promise this year.
Enthusiasm for Fossil Fuels Wanes as Expectations for Renewables Far Exceed Those of Traditional Energy Sources in 2016
Aligning with their interest in sustainable investing, Denver-area HNW investors rank renewable energy sources highest when focusing on specific types of energy investments in 2016 – with solar (64% rate as “good”) and wind (56% rate as “good”) taking the top spots. Natural gas (49%), the only traditional source to crack the top-five, and battery-powered electric vehicles (41%) follow not far behind.
When asked about a series of energy-related issues or initiatives, renewables garner the most support. In particular, expanding wind (88%) and solar (87%) farms topped the list of priorities for respondents.
Investment Considerations and Portfolios
Concerns about terrorism (85%), the prospect of affording quality healthcare (83%) and the government budget deficit (81%) weigh heavily on Denver-area HNW investors’ minds. Over half (55%) feel there will be another recession in the next five years.
Denver-area HNW investors also overwhelmingly feel it is important for the Federal government to address healthcare costs (90%), the economy (86%) and our nation’s infrastructure (80%).
When considering investments for this year, Denver-area HNW investors:
• Favor: dividend-bearing stocks (51% say “good”), actively managed mutual funds (42%), mutual or exchange-traded funds (42%), broad stock market and exchange-traded funds (38%), and a cash position (36%)
• Disfavor: hedge funds (7% say “good”), insurance (13%), private equity funds (16%), international stocks or mutual funds (20%) and bond funds (20%).
When considering various investment sectors, Denver-area HNW investors:
• Favor: technology (68% say “good”), pharmaceuticals (51%), renewable energy (51%), bio-tech (50%) and healthcare (48%)
• Disfavor: consumer discretionary (16% say “good”), insurance (22%), entertainment (24%), tourism (26%), financial services (28%) and industrials (also 28%).
Todd Hauer is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Denver. The information contained in this interview is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Morgan Stanley Smith Barney, LLC, member SIPC.
*The Investor Pulse Poll was conducted by GfK Public Affairs & Corporate Communications using the GfK KnowledgePanel from December 3 to December 28, 2015. In order to qualify for this study, respondents were required to have $100,000 or more in household liquid investable assets, be between the ages of 25 and 75 years old. The Investor Pulse Poll surveyed 1,003 high net worth investors from December 3 to December 28, 2015. High net worth investors account for 95% of total U.S. household investable assets by value, according to Federal Reserve data. Oversamples were obtained in the Denver metropolitan area.