Posted: February 10, 2014
What Denver investors want
They favor technology, bio-technology and energyTodd Hauer
(Editor's note: This is the second of three parts. Read Part One.)
Morgan Stanley has released findings from the “Morgan Stanley Investor Pulse Poll” of 1,004 U.S. high net worth (HNW) investors age 25 to 75 with $100,000 or more in investable household financial assets, including an oversample of 304 Denver investors. Approximately one in three of those interviewed had $1 million or more in household financial assets. The poll was conducted October to December 2013, by GfK Public Affairs and Morgan Stanley Corporate Communications.
In this second part of this series, we’ll delve into Denver investor sentiment on their portfolios and investment preferences.
Portfolios and Investments
At the end of 2014, stocks or equities are expected to comprise the biggest part of Denver High-net worth (HNW) investors’ portfolios (41 percent). About equal but smaller proportions of the portfolios will be in cash (20 percent), fixed income vehicles (19 percent) and other investments (21 percent).
Compared with Denver HNW investors as a whole, Denver millionaires are more likely to say their portfolios will be in stocks or equities, and correspondingly less likely to say they will be in all other investments.
Among Denver HNW investors, the investment viewed most favorably for 2014 is S&P 500 Index funds (47 percent), followed by dividend-bearing stocks (46 percent), REITs (44 percent), mutual or exchanged traded funds (44 percent) and preferred stocks (41 percent). None is cited as a bad investment by more than 14 percent.
In the view of Denver HNW investors, the top investment sector for the coming year is technology (70 percent “good”), followed by energy (66 percent), real estate (57 percent), pharmaceuticals (53 percent), bio-technology (52 percent) and communications (51 percent). Pharmaceuticals and, most especially, bio-technology are regarded less positively by Denver HNW investors than their counterparts nationally.
Health care is cited as a bad investment by 25 percent of Denver HNW investors. That is the highest figure for any sector; but health care is also named as a good investment by a nearly half (49 percent) of investors, illustrating the complexities of investing in the sector as the Affordable Care Act plays out.
The U.S. is the only country that a majority of Denver HNW investors regard as a good investment for 2014. And while that majority is not a large one (55 percent), it exceeds by percentage points in double digit comparable figures for other countries led by China (44 percent), Brazil (41 percent), India (41 percent) and Japan (41 percent). Western Europe, still apparently saddled with the stigma of the Euro crisis, lags at 33 percent.
Fully 44 percent of Denver HNW investors have invested in oil and gas in the past three years, more than have invested in alternative or renewable energy companies (24 percent) or Colorado-based energy companies (21 percent). Likewise, more Denver investors plan on investing in oil and gas (38 percent) than alternative or renewable energy companies (27 percent) or Colorado-based energy companies (25 percent) in the next three years.
Unlike the percentage planning to invest in oil and gas, the percentages planning to invest in alternative or Colorado companies are a bit higher than the percentages of investors who have already invested in them. When asked about specific alternative energy investments, from solar to electric cars, the figures show interest across the board – especially among millionaires.
Todd Hauer is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley Smith Barney in the Denver Tech Center. He can be reached at 720-488-2406 or toll free at 1-800-347-5099, or you can email him at Todd.Hauer@morganstanleysmithbarney.com.