Though the Dow increased nearly 2,000 points from September 2012 to the same period in 2013, investors¡¯ willingness to take on more risk exposure remains virtually unchanged. Furthermore, this stubborn holding pattern is consistent across all age and wealth segments. This and other findings are included in the recently released 7th annual Investor Brandscape®, a Cogent Reports study from Market Strategies International.
Overall, investors indicate that they distribute 36% of their assets into ¡°low risk¡± investments, 44% into ¡°moderate risk,¡± and the remaining 20% of assets into ¡°high risk¡± investments. This risk distribution is identical to that which was reported a year earlier in September of 2012. While risk profiles vary by age, over the one-year period no discernible changes in risk tolerance took place within any of the five generational cohorts examined in the study: Generations X and Y, 1st and 2nd Wave Boomer, and Silent Generation investors.
¡°To use a timely analogy, it¡¯s as if a Polar Vortex has descended upon investors,¡± says Meredith Lloyd Rice, senior product director and lead author of the report. ¡°There is little evidence that investors are chasing returns and increasing risk the way they have in past market rallies. In fact, investors this year report that they have an even greater proportion of their assets in cash than they did in 2012.¡±
A number of factors help explain investors¡¯ current mind-set. According to the report, 52% say they are willing to accept lower investment returns in order to preserve their savings, and an equal proportion, 52%, are worried about another market meltdown eroding their savings. ¡°These broad sentiments are felt by investors, regardless of age,¡± say Lloyd Rice. ¡°For many older investors, their risk-taking days are over. For many younger investors, they have yet to begin.¡±
