U.S. retail investors feel wealthier than they were a year ago, but optimism about future equity returns is dimming, according to a new report from San Francisco-based Charles Schwab.
The brokerage firm’s latest survey of retail sentiment finds that nearly 60% of its clients report being better off financially compared to a year ago, which is the reading’s highest rating in five years.
Moreover, firm’s retail clients were net buyers during the second half of 2017, their average allocations to cash have decreased from 21.1% a year ago to 18.5% now.
Client sentiment about the future is a bit dimmer now than it was a year ago, according to the report. Forty per cent of clients now feel bullish on the prospects for the U.S. stock market, down two percentage points from a year ago. However, 41% of investors report feeling bearish, which is up by 10 points from the previous year.
The biggest worries for investors are the U.S. political environment and the possibility of a stock market correction.
“There are signs of continued positivity from retail investors with an increasing number of clients feeling better off compared to a year ago. But we’re also seeing some bears come out of hibernation due to concerns about a possible stock market correction and uncertainty in Washington D.C.,” says Terri Kallsen, executive vice president and head of investor services at Schwab, in a statement.