Millionaires are optimistic that the stock market will return between six per cent and 10 per cent in 2007, according to Wealth in America 2...

Millionaires are optimistic that the stock market will return between six per cent and 10 per cent in 2007, according to Wealth in America 2007, the second annual survey of US high net worth households conducted by Northern Trust. The study defines high net worth as those having over $1 million in investable assets. Sixty-two per cent of millionaires questioned expect market gains of six per cent and higher, while only six per cent expect market losses instead of gains in 2007. The positive outlook of "bullish" millionaires is due primarily to their optimism that corporate earnings growth will remain strong this year (31 per cent are “very optimistic"); and that the current US economic expansion will continue (26 per cent are "very optimistic" about this). The negative outlook of "bearish" millionaire investors stems from their concern about three factors that could have a dampening effect on stocks: a worsening international crisis (58 per cent are "very concerned"); increasing federal budget and trade deficits (56 per cent "very concerned); and the decline in the value of the dollar (45 per cent "very concerned"). As for asset allocation trends, the survey found that domestic equities dominate the portfolios of most millionaire investors surveyed, representing 43 per cent of their assets and up slightly from 41 per cent in 2005. And as a response to the downturn in US house prices, wealthy investors reduced their exposure to real estate investments from 13 to eight per cent. International equities, however, now comprise 10 per cent of high net worth portfolios, up from eight per cent in 2005. Households with $10 million or more in investable assets report that 31 per cent of their portfolios are allocated to alternative investments such as private equity, hedge funds and commodities. But households below the $10 million investable asset threshold maintain average alternative investment allocations of seven per cent. Wealthy investors continue to value liquidity, according to the report, holding as much as 13 per cent of their assets in money market reserves or other cash-equivalent instruments.