Ultra-Wealthy Investors More Optimistic About 2008 Returns Despite Market Turmoil

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Despite a turbulent stock market, nearly six out of 10 ultra-wealthy Americans - compared to 31 percent a year ago - express more optimism about their investment portfolios in 2008, according to a survey by PNC Wealth Management, a member of The PNC Financial Services Group, Inc. (NYSE: PNC).

Despite a turbulent stock market, nearly six out of 10 ultra-wealthy Americans - compared to 31 percent a year ago - express more optimism about their investment portfolios in 2008, according to a survey by PNC Wealth Management, a member of The PNC Financial Services Group, Inc. (NYSE: PNC).

Asked for their outlook on the components of their investment portfolio, 58 percent of the respondents with $10 million or more in investable assets say they are much more/somewhat optimistic. Only 4 percent said they were somewhat more/much more pessimistic.

"When our survey was taken, interest rates were on the way down. The ultra-wealthy likely are looking longer term, knowing that historically the stock market has advanced during times when interest rates are falling, said Thomas Melcher, managing director and chief investment officer of Hawthorn, the division of PNC Wealth Management that serves clients with $20 million or more in investable assets.

He added, "With a greater capital base, the ultra-wealthy are often in a better position to withstand market volatility. Markets rise and fall over time. But the act of investing is long-term by definition and we advise people to diversify in order to smooth out the bumps."

Concerns About U.S. Economy
Yet caution remains the word on the U.S. economy, as 44 percent of the survey's overall 1,509 respondents (all of whom had at least $500,000 in investable assets) are more pessimistic about the national economy in 2008, up from 35 percent a year ago. Those who are more optimistic dropped to 27 percent compared to 38 percent last year. In addition, 35 percent are now concerned about a recession, up from 28 percent a year ago.

"There is no question the economy is slowing, but when you look at the statistics, it remains on stable ground," Melcher said. "The presidential election cycle often brings skewed perceptions about the economy."

New Year's View: Investments, Real Estate
The fourth annual Wealth and Values Survey by PNC, which is among the nation's top 20 wealth management firms, also revealed insights about the following investment-related matters in 2008:

Stock Market Outlook: Optimism is lower about the overall performance of the stock market, as 39 percent say they are more optimistic, down from 51 percent last year. The survey showed that pessimism has increased to 27 percent from 15 percent. About a third, 34 percent, are taking a wait-and-see attitude, saying they are neither more optimistic nor more pessimistic, the same as a year ago.

Portfolio Performance: Despite stock market concerns, the wealthy overall are positive about their own investment decisions, but less so than the ultra-wealthy, PNC found. Among all respondents, 45 percent are more optimistic about the components of their investment portfolio while 13 percent are more pessimistic and 42 percent are neither more optimistic nor more pessimistic.

Sectors - Best Bets: When asked which investment sectors have the best chance for gains in 2008, 61 percent chose energy/utilities, followed closely by technology (59 percent) then health care (53 percent). Next was the financial sector (29 percent), followed by manufacturing and transportation (both 10 percent) then retail (8 percent).

Real Estate Market: The wealthy are concerned about the real estate market in general, but not their own investments or the value of their own residence. More than half (56 percent) said they are more pessimistic about the real estate market in 2008, compared to 46 percent a year ago. But only 23 percent of homeowners are concerned about the value of their primary residence if the current downturn in the real estate market was to continue into 2008. More than half, 56 percent, are not concerned. Further, only 27 percent of those with real estate investments other than their residences are concerned about the value of their investments if the current downturn continues, compared to 55 percent who are not concerned.

Survey Methodology
The Wealth and Values Survey was commissioned by PNC to identify attitudes about wealth among high-net-worth individuals, how it affects their lives and their needs in managing wealth. The survey was conducted online within the United States by Harris Interactive in September and October 2007 among a nationwide cross section of 1,509 adults (age 18 or over) with annual incomes of $150,000 or above (if employed), at least $500,000 of investable assets (unless retired) or at least $1 million of investable assets (if retired).

The total sample contains four distinct groups: 610 with assets of $500,000 to
$999,999; 668 with assets of $1 million to $4.9 million; 120 with assets of $5 million to $9.9 million; and, 111 with assets of $10 million or more. Figures for age, sex, race, education, region, income, asset level and propensity to be online were weighted where necessary to reflect the composition of the wealthy adult American population. Findings are significant at the 95 percent confidence level with a margin of error of +/- 2.5 percent.

The survey was designed and managed by HNW, Inc. (http://www.hnw.com), a leading provider of wealth marketing software and solutions to financial services companies and intermediaries seeking to capture and serve the high net worth market.

The PNC Financial Services Group, Inc. (http://www.pnc.com) is one of the nation's largest diversified financial services organizations providing consumer and business banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management; asset management and global fund services.

This report has been prepared for general informational purposes only and is not intended as specific advice or recommendations. Information has been gathered from third party sources and has not been independently verified or accepted by The PNC Financial Services Group, Inc. PNC makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. PNC cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Any reliance upon the information provided in the report is solely and exclusively at your own risk.

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