How do your clients define ‘long term’?

By Staff | March 2, 2017 | Last updated on March 2, 2017
2 min read

More clients are identifying their “long term” investing horizon as less than five years, says a new survey by AMG Funds.

The poll of affluent U.S. investors by the U.S. retail arm of AMG, a global asset manager, says 86% of U.S. investors claim they have a long-term outlook, but when asked how they define long term, more than half of them said it was a period of less than five years.

Millennials had the shortest definition of “long-term,” the poll found, with a majority defining long term as less than three years.

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The survey also found investors are more conservative. Investors focused on maximizing growth and returns had fallen to 19% in 2016 from 22% in 2015, while those prioritizing preservation of principal and minimization of losses increased to 30% in 2016 from 28% the previous year.

AMG Funds surveyed 1,000 affluent investors, with over US$250,000 in household investable assets, between November 28 and December 7, 2016.

Almost 40% of respondents described their risk tolerance as conservative while 26% said they were aggressive. On average, respondents said they allocate 45% of their total portfolio to equities. Of all groups, millennials allocated the least, 30% of investments, into equities.

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At the same time, 64% of investors polled said they expect U.S. stocks to rise, compared with 47% who said so the previous year.

“Investors with a positive view of the economic environment may wish to consider re-evaluating their allocation strategy to ensure that their investment approach is aligned with their outlook, risk tolerance, and the time horizon of their goals,” Jeffrey Cerutti, CEO of AMG Funds, says in a statement.

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The staff of have been covering news for financial advisors since 1998.