Investors favouring stocks over cash, survey says

Tuesday 18 May 2021

Investors continue to hold increased levels of cash in their portfolios but are considering allocating more to stocks, according to a new survey by UBS.

41% of investors said they were considering increasing their holdings in stocks over the next six months, while 12% said they were looking to reduce them in response to the quarterly Investor Sentiment Survey of individual investors and business owners globally.

Meanwhile, 47% of investors said they were planning to keep their portfolios as they are.

Cash formed 22% of individual investors’ portfolios globally, having dropped three percentage points since September 2020. UBS said the high cash weightings contrast with positive market and economic developments over that timeframe, including the rally in stocks, the rollout of vaccines, and the improvement in economic indicators. 

In particular, 70% of investors said they see technological transformation as a top theme over the next six months, with 64% believing that stocks are an effective way to diversify portfolios during the recovery and 63% hold the view that sustainable investing is a promising opportunity. 

Half of investors were also very concerned and 26% were somewhat concerned that cash will take a performance hit if inflation rises too much. 41% said they would increase their holdings of stocks in such a scenario and 31% said they would increase their real estate positions. 

Iqbal Khan, President of UBS Europe, Middle East and Africa and Co-President of UBS Global Wealth Management, said: “We are pleased to see investors citing sustainable and thematic investments among their top opportunities. As the market rally advances, we believe these areas will remain an important means of diversifying portfolios away from traditional stock and bond allocations.”