Fifty-nine percent of registered investment advisers (RIAs) do not see the U.S. equity bull market coming to an end anytime soon, Aberdeen Asset Management found in a survey.
Forty-nine expect the bull market could
continue for another three years. Nonetheless, they are diversifying clients’
assets into international and emerging markets equities, U.S. fixed income and
alternatives to hedge against a market downturn.
However, RIAs appear conflicted about their equities outlook, with 38% allocating more to international and emerging market equities, and 27% cutting back on equities and putting the money into U.S. fixed income and alternatives.
“Risk is a constant that needs to be at the forefront of investment decisions,” says Mickey Janvier, head of business development-wealth management at Aberdeen. “These results highlight the fact that advisers are increasingly complementing their U.S. equity exposures by adding to relatively uncorrelated asset classes.”
Janvier said investors need to take a cautious
approach: “We believe business fundamental 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 impact 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
Asked what factors they consider when weighting investment options, the most common is market risk and macro-economic trends (cited by 47%), followed by default risk and the quality of underlying investments (17%), inflation or purchasing power risk (14%), mortality risk (12%) and liquidity risk (10%). Seventy-five percent said it is important to factor in clients’ risk tolerance when building their portfolios.