Like Investors, Advisers Eyeing Volatility

The second quarter results of the “Fidelity Advisor Investment Pulse” survey show market volatility has jumped from its third-place position during the first quarter of 2014 to top the list of concerns cited by financial advisers heading into the second half of 2014.

Fidelity says many advisers are taking advantage of sector investing to diversify their clients’ portfolios, manage risk and help generate potential alpha. Many advisers surveyed cited the challenge of ensuring that their clients continue to benefit from the bull market, while also protecting them against the downside (see “Downside Protection Has a Price”).

“Based on our second quarter survey results, we know that many advisers are thinking about a possible market correction, but at the same time they are looking for ways to find growth and generate income for their clients,” explains Scott Couto, president, Fidelity Financial Advisor Solutions. “We believe that the differences between winners and losers among asset classes and individual securities are likely to increase, favoring active asset managers with the ability to conduct the research necessary to identify those opportunities offering the best chances for growth.”

Fidelity investment and research teams see signs pointing to continued growth in equities, Couto adds, especially in the areas of value stocks and certain segments of the economy, including the technology sector and the health care sector.

Portfolio management and investment allocation efforts also topped advisers’ lists of concerns at the end of the second quarter, Fidelity says, with many advisers suggesting they are on the lookout for undervalued securities with room for growth.

Moving down the list of concerns, advisers appear somewhat less concerned with questions about interest rates, bonds and fixed-income investing. Still, advisers are taking steps to help clients prepare for an unfamiliar rising interest rate environment. They are also interested in finding ways to safely guarantee yield within client portfolios.

More information on the second quarter “Fidelity Advisor Investment Pulse” survey is available here.