Turns out that rich folks and their high-end financial advisors are uneasy about the economy, so maybe everyone else should fret, too. A new survey of family offices, which run money for the super-wealthy, finds that 55% of these outfits globally expect a recession next year.
The 2019 UBS Global Family Office Report, released this week, indicates that 42% of family offices world-wide are raising cash reserves to buffer themselves against the anticipated downturn. And they have a lot on the line: The UBS survey, done with the help of Campden Research, says these entities world-wide manage an estimated $4.9 trillion, with the average $917 million per office.
North American family offices are the most exposed to risk, with 38% in equities, as opposed to 32% in Europe and 22% in the Asia-Pacific region.
Less-well-off people are growing more leery, as well. The Conference Board, research group announced on Tuesday that its US consumer confidence index dropped to 125.1 in September from 134.2 in August, the biggest dip since January. Perceptions of both the current economy and its prospects diminished markedly. And an ABC/Washington Post poll earlier this month says that 60% of Americans believe a recession will hit next year.
The weak consumer sentiment reading contributed to a down day on Wall Street, as the S&P 500 lost 0.84%. Anti-China remarks from President Donald Trump and a growing movement in the US House to impeach him didn’t help.
Among the rich set, a real dismay exists about the US-China trade war, the UBS poll shows. In North America, 94% say the trade war will have a major impact on their portfolios, surely not for the better. Almost half (45%) of those surveyed are re-aligning their investment strategies to reduce risk. And close to a fifth (22%) are lowering leverage exposure within their holdings.
“Family offices are cautious about geopolitical tensions,” wrote Rebecca Gooch, Campden’s director of research, “and there is a widespread sense that we’re reaching the end of the current market cycle.”