Despite some encouraging economic reports in May, including an upbeat jobs report, Affluent investors are exhibiting a cautious mindset, according to a new investor preferences survey conducted by Spectrem Group.
When asked how they intend to invest in the coming month, Affluent investors indicated a retreat from Stocks and even more conservative Cash. For the third consecutive month, an increasing number of Affluent investors said they intend to stay on the sidelines (up .08 of a point to 36.40, a six-month high).
The only two investment categories that posted an increase in May were Bonds (8.40 points, up from 8 in April and the highest reading since last December) and Real Estate (10.40 points, up from 6 and a three-month high). Earlier this month, the U.S. Commerce Department reported that housing stars jumped 20.2 percent in April, while permits hit a seven-year high.
But the Federal Reserve’s decision on when it will raise interest rates continues to vex investors. At its last meeting on April 28-29, the Fed downgraded its view of the U.S. economy, which rose at only a 0.2 percent annualized rate after advancing 2.2 percent the previous quarter, according to Commerce Department data. The minutes of that meeting, released this month, indicate that a rate hike in June is unlikely.
“Most Fed policy members,” the minutes showed, “thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility.”
Fed officials will next meet on June 16-17.
Spectrem Group breaks down Affluent investment preferences by Millionaire and non-Millionaire households. Non-Millionaires are much more likely than their Millionaire counterparts to stay on the sidelines in the coming month (43.7 points—a six-month high—vs. 29.8 pts. for Millionaires). For the second consecutive month, these investors are as likely to invest in Cash as they are in Stocks. But they are more likely than Millionaires to jump on the Real Estate bandwagon. This category jumped 6.8 points in May from the previous month to a three-month high.