Market Conditions

Just 46 percent of high-net-worth investors thought that the market would end 2012 higher than its current levels, and 30 percent believed it would be down from current levels.
Despite market pessimism, these investors still expected positive returns. When asked about their average long-term annual return, investors said 5.8 percent, which compared with the 1.3 percent annualized S&P 500 return from the previous five years.
Only 34 percent of respondents believed the current market rally was sustainable. This lack of confidence may explain why 54 percent of investors were only partially invested or slowly re-entering the market.

Taxes

Fifty-six percent of high-net-worth investors believed that politicians would postpone a decision on taxes and spending until 2013 when a new Congress was in place. Thirty percent believed a modest short-term compromise would be achieved.
Potential income tax increases were the greatest concern of respondents (35 percent), with capital gains tax increases second (27 percent).
The top three steps half of respondents said they could take in anticipation of tax increases were converting retirement assets to a Roth IRA (12 percent), accelerating income into 2012 (12 percent) and deferring losses or deductions into 2013 (10 percent).

Investment Opportunities

Forty-five percent of high-net-worth investors believed that large cap equities offered the greatest potential upside over the next 12 months. This was followed by mid-cap equities (29 percent) and small-cap equities (26 percent).
For the next 12 months, the energy sector was investors' top choice (22 percent) for earnings potential. Information technology and health care were tied for the second spot at 19 percent.
While 32 percent of investors were already in the biggest emerging markets (Brazil, Russia, India and China), only 12 percent were investing in smaller emerging markets in Asia, Africa or Latin America.

"Successful investors keep their eyes focused on their long-term goals, in spite of short-term turmoil," John Sweeney, executive vice president of Fidelity Planning and Advisory Services, said in a statement.

Instant Insights /

Fidelity checks its wealthy customers' pulse

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