Election Anxiety Heightens: Wealthy Investors Would Rather Stash Cash In Mattresses Than The Market

Wealthy U.S. investors are keeping a tight grasp on record cash balances, fearing that the U.S. presidential election will devastate their retirement savings, Reuters reported, citing a senior UBS Group AG executive.

Bob McCann, who chairs the UBS' Americas division, told Reuters that while clients express economic confidence, they are "hesitant to invest because the Nov. 8 election seems so unpredictable."

Election Woes Weigh Heavily

"Although the U.S. stock market hit a new high this week, many clients would rather sit on the sidelines than risk the kind of losses they faced in 2008," Reuters paraphrased McCann as saying.

"Historically, individual investors define risk as, 'How much volatility can I live with in my portfolio?'" McCann told Reuters.

Related Link: Citi Research Explains The Cause For So Much Presidential Uncertainty

"The definition has changed to, 'How much money can I afford to lose permanently?'"

Investor Sentiment

There is no surprise that investors prefer to remain on sidelines as "unpredictable and sometimes fiery rhetoric from candidates" have brought huge losses to investors, Reuters continued, highlighting presumptive Democratic nominee Hillary Clinton's September tweet that wreaked havoc on biotech stocks.

Clinton is not alone in disruptive rhetoric, however. "Republican candidate Donald Trump has promised to dismantle financial reform laws, force Canada and Mexico to renegotiate the North American Free Trade Agreement, and slap steep tariffs on Chinese and Mexican imports," Reuters elaborated.

According to a UBS survey of 2,200 high net worth investors, 84 percent of respondents indicated that the election "will have a significant impact on their financial health."

McCann commented on the study, to be released later this month, that "individual investors have consistently held an average of 20 percent of their portfolio in cash over the past five years, according to UBS data."

Reuters, citing McCann, said, "Many of the wealthiest UBS clients are so scarred by losses from the financial crisis that they insist on having at least 25 percent of their holdings in cash, even when they feel confident about the economy."

"We've seen cash holdings higher than what you would traditionally think [...] since 2009 on," he said. "I don't think that's a temporary phenomenon."