Technology Tops Energy as The “Best Bet” For Investment
Houston high net worth investors see a place for U.S. policy in addressing the nation’s energy challenges. According to a new survey conducted by Morgan Stanley late in 2014, 88% agree that the U.S. should invest in technology and programs designed to increase energy efficiency. Alternative energy initiatives, regulations and technological advancement make the industry an attractive, but at times, unpredictable place to grow your personal investment portfolio. Diversification, even within the energy sector, may be appropriate to help safeguard your portfolio in cases of fluctuations within the market.
According to Morgan Stanley’s poll, nearly half of Houston’s HNW investors favor expanding production of traditional energies such as oil, gas and coal, while 36% favor expanding production of alternative energies such as wind, solar and biomass to increase energy efficiency.
A broad understanding of diverse energy investing options is essential to making informed investing decisions. In Houston, investors’ behavior and outlook on the energy sector are informed by high awareness of energy issues – 88% report that they have at least some knowledge of U.S. energy issues and problems and another 44% say they have a lot of knowledge of this topic. Considering Houston investors’ level of knowledge, it is not suprising that the poll shows that performance, policy factors and a desire for diversificiation affect the approach they take to energy investments.
Considering falling oil prices, the top three considerations may have some impact on Houston investors’ preference for the energy sector to a preference for techonology.
Just a year ago, the top investment sector was energy (cited as good by 77%), followed by technology. At the time, the emergence of energy as the number one sector in Houston bucked the general dominance of technology across the nation.
However, the most recent poll paints a different picture: Confidence in the energy sector is falling and the technology sector topped the list. According to Houston HNW investors, the top investment sector for the coming year is Technology (cited as good by 78%), followed by Energy (71%).
Despite the rise in the tech sector’s popularity, those in Houston are still less likely to say that the Technology (78% vs. 87%) sectors are good investments for 2015 compared with HNW investors nationally.
Particularly in Houston, where the oil and gas industry makes up a large part of our local economy, the energy sector has emerged as one of the fastest growing, most attractive and most complex investment sectors. It is important to understand investing trends across different markets throughout the US and why diversification within the energy sector and into other sectors is an important aspect to a personal finance portfolio. Contact a financial professional to learn more about diversification within your portfolio.
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The Morgan Stanley Investor Pulse Poll was conducted via telephone interviews from October 14 through December 2, 2014, by GfK Public Affairs & Corporate Communications. A total of 305 respondents in the greater Houston market were interviewed using a listed sample of landline phone numbers pre-identified as high net worth households ($100,000 or more in liquid investable assets). Respondents were required to be between the ages of 25 and 75 years old and to be one of the primary decision makers in the household for financial matters. Quotas were applied in order to obtain approximately one-third in each of the following categories: $100,000 to $499,000; $500,000 to $999,000; and $1 million or more in investable assets. Results were then weighted to age within each of these three asset classes using the Federal Government’s Survey of Consumer Finances data. The margin of error on the total sample is +/-5.4 percentage points on the total; the margin of error among subgroups is higher.
Claudia Mollerup-Madsen is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Houston. The information contained in this interview is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Morgan Stanley Smith Barney, LLC, member SIPC.