Signs of recovery are tempered by concerns about the election.
The latest UBS Investor Sentiment survey finds that 41% of investors are optimistic about the economy in the short term (next 12 months), a significant rise from the 30% who felt this way in the first three months of the year. As for the long term, investor confidence remains high, with three-quarters of respondents expressing a positive outlook for the next decade.
With this optimism comes an appetite to invest. More than a quarter of investors surveyed say they plan to invest more in the next six months.
However, politics are top of mind for most, with the political environment the top concern, ahead of even COVID-19. The economy, the nation's emergency response capabilities and healthcare are major election issues for investors. While most investors prefer Trump for the economy, most have more confidence in Joe Biden for emergency management and healthcare.
As for positioning, just over a quarter of investors say they will increase cash holdings should Biden win the election, while the same percentage of investors say they will increase stock holdings if Trump is reelected.
Despite business owners being hard hit by the pandemic, optimism in the business community has rebounded. 69% feel positive in Q2, higher than in Q1 and approaching the level of optimism seen at the end of 2019. 58% of business owners say they had received financial support from the government and four out of five said that the support had been very helpful. One-third of business owners are looking to hire more but a majority say weathering another lockdown is their biggest worry.
How to navigate the US election
As the US presidential race enters its final months, the UBS Chief Investment Office recommends investors consider the implications the outcome could have on their portfolios. A decisive swing to either party would impact a range of sectors, from energy and finance to technology and healthcare. We have developed three election equity baskets to help investors navigate the contest.
A Blue Wave
The Democratic Party takes both the presidency and wins a majority in Congress.
A Red Wave
The Republican Party takes both the presidency and wins a majority in Congress.
Many investors may prefer to keep politics out of their portfolios.
Let’s make sure you’re prepared for what’s next.
Talk to your UBS Financial Advisor.
About the survey
UBS surveyed 902 investors and 500 business owners in the US with at least $1M in investable assets (for investors) or at least $1M in annual revenue and at least one employee other than themselves (for business owners), from June 23 – July 13, 2020. For the 1Q20 results, UBS surveyed 908 investors and 505 business owners in the US with at least $1M in investable assets (for investors) or at least $1M in annual revenue and at least one employee other than themselves (for business owners), from April 1 - 20, 2020. For the 4Q19 results, UBS surveyed 915 investors and 500 business owners (with at least $250k in annual revenue) in the US, from December 26, 2019 - January 7, 2020. For the 3Q19 results, UBS surveyed 905 investors and 506 business owners (with at least $250k in annual revenue) in the US, from September 27 - October 8, 2019.