Over half of Americans view stocks as risky and more than four in 10 plan to adopt a more conservative portfolio allocation, new research reveals.
Franklin Templeton, San Mateo, Calif., published this finding in its 2012 Franklin Templeton Global Investor Sentiment Survey, which polled more than 20,000 individuals in 19 countries, representing 70% of the world's GDP. Designed in partnership with Duke University psychology and behavioral economics professor Dan Ariely, the survey examines factors influencing investors' outlooks and behavior.
More than half (51%) of U.S. respondents consider stocks to be risky, which is on par with the 52% of global respondents holding this view, the report finds. Asked to apply their current risk appetite to their investment allocation plans, 43% of U.S. respondents indicate they would seek to adjust their portfolio to be more conservative this year, while less than a fifth (19%) would seek to be more aggressive.
Among global findings, respondents in the Asia-Pacific region were the most inclined to assume additional risk, with just 26% seeking to become more aggressive (vs. 21% for the global average). And 32% seek to become more conservative (vs. 38% globally).
Near-term pessimism is leading many Americans to keep their investments close to home for the immediate future. When given the choice to invest in only one region next year, 82% selected the U.S. or a combination of the U.S. and Canada, while Asia and Europe, for instance, were chosen about 10% and 4% of the time, respectively. Home country bias among U.S. respondents was stronger than among global respondents, 56% of whom would select their own country in this scenario, the survey says.
Input collected from the 1,142 U.S. survey respondents suggests their reluctance to invest in equities results from “an overall uncertainty about the global economy and market performance.”
Half of U.S. respondents believe the U.S. economy has deteriorated since last year, in spite of the fact that the Dow Jones Industrial Average had positive returns in 2011, as well as in 2010 and 2009.Such negative perceptions were even more pronounced when Americans looked globally, with 54% indicating a belief that the global economy deteriorated in 2011.
U.S. respondents' perceptions of the global economy were in line with those of global respondents, 51% of whom believe the global economy deteriorated last year, but more negative than countries like India and Brazil, where just 12% and 34% of survey participants, respectively, held this negative view.
Looking ahead, Americans expressed varying degrees of optimism about return expectations in 2012, with 46% believing the market will be up slightly to up significantly and 36% anticipating an annual return of 5% or greater for equities this year. In contrast, 19% foresee negative returns for equities in 2012.