Trend reflects expectations of continued economic improvement, strong equity and real estate markets

AMG Funds LLC, the U.S. retail distribution arm of global asset management company Affiliated Managers Group, Inc. recently announced findings from its third annual investor “Wealth Management Trends in America” report. The survey polled nearly 1,000 affluent individual investors with over $250,000 in household investable assets about their market expectations and investing sentiment for the year ahead.

Affluent investors are increasingly confident overall, with the majority of respondents from all demographics predicting that continued economic improvement would drive strong domestic equity and real estate markets over the next 12 months, despite higher expected interest rates and inflation. Millennials stand out for being particularly bullish about the U.S. economy and international equity markets.

Topline investor expectations include:

Increasing Confidence in U.S. Economy: 60% of investors expect the U.S. economy to continue to improve, compared with 58% and 43% in 2016 and 2015, respectively. This optimism is consistent across age cohorts. Furthermore, only 16% of investors expect the U.S. economy to decline.

Sustained Bullishness about Domestic Equities: 69% of investors expect U.S. stock indices to continue to rise, compared with 64% in the prior year. These expectations are largely consistent across demographic groups.

Increased Enthusiasm for International Equities: 51% of investors expect international stocks to rise, compared with 39% in the prior year. Millennials are the most optimistic, with 61% of respondents expecting international stocks to appreciate in the coming year.

Strong Outlook for Real Estate: 67% of investors expect real estate prices to rise in 2018. Investors over the age of 72 are especially bullish, with 76% expecting an increase in real estate prices.

Interest Rates Expected to Rise: The majority of investors (76%) believe interest rates will increase, though this sentiment skews strongest among investors over 72 (78%) and is less prevalent among Millennials (66%)

Stable Inflation: After a prolonged period of low interest rates, most investors (61%) expect inflation to rise in 2018, compared to 65% in the prior year.

Continued Low Market Volatility: Only 25% of investors expect high to very high market volatility—a drop from 32% in the prior year. Younger investors are more cautious than older generations, with 54% of Millennials and 30% of GenX investors expecting high to very high volatility in the coming year.

“Affluent investors are more confident and optimistic than they have been for several years. At the same time, as expectations and markets continue to evolve, we’ve begun to see a disconnect between investors’ market sentiment and their portfolio positioning,” said William Finnegan, Chief Marketing Officer of AMG Funds. “We encourage investors to match their asset allocation decisions with market expectations and long-term investing goals.”

The AMG Funds survey was conducted online among affluent investors with over $250,000 in household investable assets, who participate in making household savings and investment decisions.

For more information on the results of AMG Funds’ research, please visit www.amgfunds.com/wealth-trends.

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