This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Legg Mason Survey Finds Investor Expectations For Income Disconnected From Market Realities, Creating Income Gap

NEW YORK, March 26, 2013 /PRNewswire/ -- According to a new survey of 500 affluent U.S. investors by Legg Mason, almost three-quarters (74%) said "now is a good time to be invested in equities" with 52% adding that they are more inclined to use equities to generate investment income.

Combining this optimism with the fact that fully 66% reported that income investing was a "top priority," 40% of respondents reported they were invested in equity income mutual funds, and 25% of those who use income generating investments said they planned to increase their allocation to equity income funds over the next 12 months.

Just 9% said they intend to decrease their equity exposure over the next 12 months; and even less (5%) plan to reduce their fixed income positions. Interestingly, 60% also believed it was a good time to be invested in real estate for income, and 15% intended to increase their allocation to this asset class.

Income Expectation Disconnect Creates Income Divide

Though they place an increasingly higher priority on income investing, almost half (48%) said they were generating less income than they had hoped from their portfolios. Perhaps this is less a function of the market and more a result of their expectations:

On average U.S. investors who use income generating products said their desired return was 8.5% and they are receiving on average 5.9%: a difference of 2.6%.

"Income-oriented investors need to consider strategies that are focused on outcomes.  Start by establishing a realistic rate of return based on long-term goals or the need to satisfy liabilities with income," said Matthew Schiffman, managing director and head of global marketing at Legg Mason Global Asset Management.  "Our survey is telling us that income-oriented investors in the U.S. are coming up well short of their goals – almost 3% short – and that number could be significant especially for retired investors who need to live on the income their portfolios generate."

Mr. Schiffman continued: "Investors have to recognize the trade-off: if they want higher income, they need to increase their exposure to risk in both fixed income and equities; if they prefer a low-risk approach to investing, they may have to reduce their income goals and expectations."

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,856.78 -278.94 -1.54%
S&P 500 2,071.26 -29.78 -1.42%
NASDAQ 4,927.37 -55.4390 -1.11%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs