Watch what clients do, not what they say. It seems affluent investors once again like equities for income, but are holding fast to their fixed asset allocations.
A new survey of affluent U.S. investors by Legg Mason finds almost three-quarters (74%) said "now is a good time to be invested in equities" with 52% adding that they are more inclined to use equities to generate investment income.
Combining this optimism with the fact that fully 66% reported that income investing was a "top priority," 40% of respondents reported they were invested in equity income mutual funds, and only 25% of those who use income-generating investments said they planned to increase their allocation to equity income funds over the next 12 months.
Just 9% said they intend to decrease their equity exposure over the next 12 months, and even less (5%) plan to reduce their fixed-income positions. Interestingly, 60% also believed it was a good time to be invested in real estate for income, and 15% intended to increase their allocation to this asset class.
But the survey also notes that although they place an increasingly higher priority on income investing, almost half (48%) said they were generating less income than they had hoped from their portfolios.
The survey opines that this might be less a function of the market and more a result of their expectations; on average, U.S. investors who use income-generating products said that their desired return was 8.5% and that they were receiving on average 5.9%.
