Slowing Global Growth and What HNW Investors Really do with their Money
By: Kevin Dombrowski
As of 6/30/18
Past performance is not an indication, prediction or guarantee of future results.
Weekly Update
Markets were up slightly this week as the S&P 500 climbed to a 5-month high due to strong corporate earnings.   Of the 48 companies in the S&P 500 index that have reported quarterly earnings so far, 87.5% have beat analysts’ expectations. 

Why aren’t markets higher? It’s been the same story as the past few months. Among other things, trade war concerns take new shape daily and hold back the market from higher growth levels. In addition, these concerns are paired with the uncertainty of the long-term effects of the tariffs on domestic companies. 

In other news, the U.S. housing market remains a soft spot in the economy as housing starts fell 12.3% in June to a nine-month low. Higher lumber prices, persistent labor shortages, and changing demographics are contributing factors.

Finally, Jeff Bezos was named the richest person on the planet with a net worth north of $150 billion – enough for him to buy every company in Ireland and still have a few billion left over. 

Money Managers Expect Slowdown in Global Growth
According to a Bank of America / Merrill Lynch survey polling fund managers who collectively manage $542 billion in assets, a majority do not expect global growth to accelerate over the next year. Major influences of this pessimism are the fears of a trade war, high levels of corporate debt, and the idea that corporate earnings have reached their peak. As a result, many managers are allocating more to fixed income and less to equities – especially cutting emerging market equities. 

It is impossible to perfectly time the market with any regularity, therefore a good strategy is to consult with a trusted investment professional to ensure you are allocated appropriately while understanding the drawdown risks.

How High Net Worth Individuals Allocate their Portfolios
According to US Trust’s 2018 High net worth investor survey , the average allocation for high-net-worth clients with $3 million in investible assets is:
55% equities
21% bonds
15% cash
6% alternatives
4% other

Additionally, the report showed that on average millennials are far more conservative (21% cash) than many experts feel is appropriate. Every age group outside of Baby Boomers increased their stock allocation from 2016 to 2017 which could possibly be a contrarian signal. Lastly, the silent generation (aged 73 to 90 ) has the most aggressive stock allocation of all (61% on average)!
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