Billionaires have cooled their appetite for U.S. stocks. Where are they moving their capital?

While the U.S. remains a key investment destination for billionaires, their optimism about returns on U.S. equities has declined markedly from 2024, an annual survey by UBS, Switzerland's largest bank, has found. The world's richest people are shifting their focus to securities from other developed markets and real assets, and are increasingly looking toward Asia.

Nearly two-thirds (63%) of respondents see the greatest potential for profitability in North America over a 12-month horizon. However, a year earlier, 80% of respondents thought so. In the five-year perspective, the share of positive assessments is slightly higher - 65%, which almost corresponds to the level of the 2024 survey (68%).

The decline in the short-term attractiveness of the U.S. market is accompanied by an increase in billionaires' interest in other regions. 40% of respondents rank Western Europe as one of their top opportunities for the coming year - more than Greater China (34%) and the rest of Asia-Pacific (33%). Only 18% of respondents bet on Europe in 2024, while 11% bet on Greater China (includes mainland China, Hong Kong, Macau and Taiwan).

However, at the horizon of five years, priorities change dramatically: about half of the billionaires consider Asia-Pacific (51%) and Greater China (48%) as the most promising countries. Only 30% consider Western Europe as a long-term goal - the structural economic and political problems in the region have an impact, UBS notes.

As confidence in Asia recovers, the wealthiest investors are returning to risk. 42% of billionaires plan to increase their investments in Emerging Markets (EM) stocks in the coming year, whose returns have started to recover after a long lag. Only 2% intend to reduce their positions in EM. In the Developed Markets segment, the appetite for purchases is also high - 43% of respondents plan to increase their share, but there are more skeptics - 7% are preparing to reduce their investments.

Billionaires' views on non-public assets are divided. In the Private Equity sector, 49% of UBS survey participants plan to increase their positions, while 20% plan to reduce their positions. In private credit (Private Debt), 33% intend to increase their share, while 22% intend to reduce it.

Hedge funds are of notable interest: 43% of billionaires plan to increase the share of this asset class in their portfolios, compared to 18% who plan to reduce it. The strategies used by hedge funds to capitalize on the divergence in prices between rising and falling stocks (equity long-short) look favorable against the background of "today's pronounced and persistent dispersions (dispersion - Oninvest) in stock returns," UBS noted.

In search of protection against inflation, large capital is flowing into real assets: 35% of respondents are increasing their investments in infrastructure, 32% - in gold and precious metals. The market of fixed-income instruments remains an area of stability: the majority of billionaires will maintain their current positions in bonds of both developed (52%) and developing (66%) countries in the coming year.

"I don't consider North America the number one investment destination, despite the depth and innovation of its markets," explains one European billionaire. - For us, geographic concentration creates risk, and the best opportunity lies in diversification. We prefer to shift our focus to real assets - they offer more tangible value and protection in the face of volatility or inflation. Stocks may be more interesting than bonds right now, but our priority is stability and sustainability, not short-term market fluctuations. Hedge funds play a supporting role for us. The main strategy is to anchor capital in assets that can retain value for the foreseeable future, especially as we go through the current global crises."

Billionaires name trade duties (66%), major geopolitical conflicts (63%) and political uncertainty (59%) as the key threats for the coming year. At the same time, fears vary by location. In the Asia-Pacific region, 75% of respondents are afraid of trade wars and duties, while in North and South America 70% of billionaires consider high inflation and geopolitical conflicts to be the main risks.

This article was AI-translated and verified by a human editor