Citi Smith Barney says that its latest poll of wealthy U.S. investors suggests that they are feeling increasingly positive about the current investment environment.

“While wealthy investors continue to feel the impact of an unpredictable market, recent gains in the Dow Jones Industrial average appear to be comforting investors’ feelings regarding the long-term health of the nation’s investment climate” says Craig Pfeiffer, executive vice president of Smith Barney.

The number of wealthy investors who believe that the investment climate is better today compared to a year ago fell sharply after the start of the late-February market volatility and has remained at around 35% since. However, over the last month the most negative assessments have begun to disappear. Only 22% now see things as being worse than a year ago, an improvement from April’s results, it noted.

There has been a noticeable increase in optimism in the share of investors saying that the investment climate will be good over the next six months (rising from 49% last month to 58% currently). Consequently, a growing number of investors are forecasting positive returns for the coming months. Seven in 10 are optimistic that their investment portfolio will meet or exceed their expectations in the near future.

Also, nearly two-thirds of investors say that now is a good time to invest in stocks or other equity-based investments, an increase of about five percentage points from last month. Enthusiasm has grown most noticeably among millionaire investors, more than three-quarters of whom believe that now is a good time to invest in stocks. The rising stock market is leading nearly four in 10 investors to anticipate that stock market performance will be higher a year from now. This represents a significant increase from 28% of investors last month.

That said, nearly two-thirds of wealthy investors characterize the economy as experiencing either a slow down or a recession; still, only 29% believe things are in an expansion or a recovery. Additionally, two-thirds believe that the war in Iraq will have a negative impact on the investment climate. The continuing rise in gas prices is also an issue for wealthy investors. More than eight in 10 believe that energy prices will be higher in the coming months, the highest score for 2007. Three out of four believe that energy costs will have a negative impact on the overall investment climate in the next six months.

The poll was conducted with investors who have at least US$100,000 in financial assets (excluding real estate and employer retirement plans).

Results are from investors interviewed for the Citi Smith Barney Working Wealth Investor Poll between April 9 and April 24.