Financial Advisors Bullish On U.S. Equities, Though Many Looking Beyond Stocks To Cushion Client Portfolios, Finds Aberdeen Asset Management Survey
PHILADELPHIA, Aug. 19, 2015 /PRNewswire/ -- New data released by Aberdeen Asset Management following a survey (as detailed below) finds that nearly six-in-ten registered investment advisors (RIAs) do not see the U.S. equity bull market coming to an end anytime soon. However, many RIAs are diversifying client portfolios by adding exposure to international and emerging market equities, U.S. fixed income and alternatives to manage the risk of a potential market decline.
Advisors are conflicted on how best to diversify client holdings to manage against a potential market downturn. More than one-third (38 percent) are allocating more to international and emerging market equities, while 27 percent are cutting back on equity exposure and allocating more to U.S. fixed income and alternatives. More than a quarter (26 percent) are continuing to ride the bull market in expectations of continued strength in U.S. equities.
"Risk is a constant that needs to be at the forefront of investment decisions," said Mickey Janvier, Head of Business Development-Wealth Management at Aberdeen. "These results highlight the fact that advisors are increasingly complementing their U.S. equity exposures by adding to relatively uncorrelated assets classes."
When evaluating whether or not an investment is appropriate for a client, almost half (47 percent) of advisors rank market risk and macro-economic trends as the most important, followed by default risk and the quality of underlying investments (17 percent), inflation or purchasing power risk (14 percent), mortality risk (12 percent) and liquidity risk (10 percent).
No Immediate End in Sight for the Bull Market
While 59 percent of advisors do not believe the U.S. is approaching the end of the bull market, 41 percent see the market reversing course in the near term and nearly half (49 percent) believe the bull market will continue its run for at least another three years.
Janvier added: "We believe business fundamentals will continue to support the U.S. equity market for the long-term investor. With the macroeconomic environment remaining constrained, due to events like the Fed tightening its policy, the Greek debt crisis and negative impacts of a strong U.S. dollar, in our view, it's important for investors to take a bottom-up approach to help navigate this environment as markets become more discriminate and sector and stock dispersion increase."
Client Portfolios and Risk Tolerance Closely Align
Given that risk tolerance has played a vital role in investing for many years now, this survey underscores that it's still top of mind for many advisors. The majority (75 percent) strongly believe that client risk tolerance impacts diversification in portfolio construction.
"By diversifying risk exposures and understanding how all the assets work together in a portfolio, we believe advisors can align calculated risks with clients' long-term investment expectations," added Janvier.
For more information on risk diversification and global themes in asset management, please visit: http://www.aberdeen-asset.us/risk-diversification
Editor's Note:
The RIA Survey was commissioned by Aberdeen and an independent party ran the survey. It was conducted between July 27 and 28 at the 2015 LPL Focus15 Conference in Boston, MA. Respondents were event attendees including Registered Investment Advisors (RIAs) and other investment industry experts. The data is based on responses from 120 respondents.
Aberdeen – simply asset management:
Aberdeen is an independent asset management company. Formed out of a management buy-out in Aberdeen, Scotland, in 1983, we are now a FTSE 100 company operating on-the-ground in over 25 countries across Europe, Asia and the Americas.
We are defined by our pure focus on asset management, including equities, fixed income, property and multi-asset portfolios. All our investment solutions are driven by our commitment to straightforward, transparent investment approaches that stress intensive, first-hand research and a long-term view.
As of June 30, 2015, Aberdeen, through its affiliates, manages assets of $480 billion on behalf of institutional and private investors.
In the United States, Aberdeen Asset Management (AAM) is the marketing name for the following affiliated, registered investment advisers: Aberdeen Asset Management Inc., Aberdeen Asset Managers Ltd, Aberdeen Asset Management Ltd and Aberdeen Asset Management Asia Ltd, each of which is wholly owned by Aberdeen Asset Management PLC. "Aberdeen" is a U.S. registered service mark of Aberdeen Asset Management PLC.
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SOURCE Aberdeen Asset Management Inc.
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