A new survey from Wilmington Trust shows recession fears are growing within the financial community, and investors would rather protect what they have instead of take an opportunity to make more.
The U.S. economy is seemingly chugging along at the moment, bolstered by consumer spending and a healthy job market. But the gross domestic product for the second quarter slowed to 2% as effects from President Donald Trump’s tax cut wore off. Economists also worry about the outcome of the U.S.-China trade war.
Moody’s Analytics chief economist Mark Zandi says future growth of the U.S. economy will depend on whether or not Trump keeps up the tariff pressure on Beijing.
“It all hinges on the president and what he decides to do with trade,” Zandi said, according to the Associated Press. “If he follows through on this tariff threat later this year, then in all likelihood growth will slow and we would end up in a recession next year.”
So investors are preparing. The Wilmington Trust survey revealed that 61% of investors with a household income of at least $225,000 would rather protect their assets from a downturn than have the opportunity for more growth, according to Barron’s. When you up the household income to $500,000 that 61% jumps up to 76%.
“We are in the late-cycle, and the upside on many investments is limited,” said Wilmington Trust’s Chief Investment Officer Tony Roth. “As a result, investors need differentiated strategies that are risk-adjusted and fee sensitive in order to meet their specific needs.”
The survey also asked about investment strategies in the face of a downturn, and 40% polled who own alternative investments said diversification of assets and protecting the low end are a top priority. A whopping 80% in the $500,000-plus bracket said they plan to put more into alternative investments over the next 12 to 18 months.
The survey polled 500 investors that are at least 35-years-old with a combined household income of $225,000 or more, and it says it will continue to poll the same group every six months to see how sentiments change going forward.