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Equities overtake real estate as top driver of US wealth since WW2
Goldman said equity allocations among households in the US and Australasia are nearing 50% of financial assets, while warning higher stock exposure could increase vulnerability to a market correction.
Equity holdings have surpassed real estate as a share of US net financial wealth for the first time since World War Two, according to a note from Goldman Sachs, highlighting how stocks have become a dominant driver of household wealth and the so-called wealth effect on consumer spending.
Goldman said equity allocations among households in the US and Australasia are approaching 50% of financial assets, a level it described as surpassing that seen during the dot-com era.
The brokerage pointed to strong stock-market gains since the global financial crisis, including over the past three to four years, as a key reason equities have risen in investor portfolios, with technology stocks taking up a growing portion of those holdings.
Goldman also warned that higher household exposure to equities can leave investors more vulnerable to a sharp market correction, particularly when valuations are elevated and macroeconomic uncertainty is high. It added that European regulatory changes, including reforms affecting Dutch and German pension systems, could encourage pension funds and insurance companies to increase equity allocations over time.